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Refer to the Graph Above

Question 55

Multiple Choice

Refer to the graph above. Suppose that the economy is at an initial equilibrium where the AD<sub>1</sub> and AS<sub>1</sub> curves intersect. Demand-pull inflation in the long run can best be illustrated as a shift of: A) AS<sub>1</sub> to AS<sub>2</sub>, and back again to AS<sub>1</sub> B) AD<sub>1</sub> to AD<sub>2</sub>, and back again to AD<sub>1</sub> C) AS<sub>1</sub> to AS<sub>2</sub>, consequently making AD<sub>1</sub> shift to AD<sub>2</sub> D) AD<sub>1</sub> to AD<sub>2</sub>, consequently making AS<sub>1</sub> shift to AS<sub>2</sub> Refer to the graph above. Suppose that the economy is at an initial equilibrium where the AD1 and AS1 curves intersect. Demand-pull inflation in the long run can best be illustrated as a shift of:


A) AS1 to AS2, and back again to AS1
B) AD1 to AD2, and back again to AD1
C) AS1 to AS2, consequently making AD1 shift to AD2
D) AD1 to AD2, consequently making AS1 shift to AS2

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