Asked by Arjan Thouli on May 16, 2024
Verified
If the aggregate demand curve shifts rightward,then _____.
A) the price level increases and output decreases
B) the resulting increase in the price level is usually called cost-push inflation
C) the resulting increase in the price level is usually called demand-pull inflation
D) the price level increases as long as the aggregate supply curve shifts leftward
E) the price level decreases and output decreases
Aggregate Demand Curve
The aggregate demand curve represents the total demand for goods and services in an economy at different price levels, generally showing an inverse relationship between price and output demanded.
Price Level
An index that measures the average changes in prices received by domestic producers for their output, affecting the purchasing power of money.
Cost-Push Inflation
An inflationary trend that results from an increase in the cost of production, leading to a decrease in supply and an increase in prices.
- Understand the impact of aggregate demand and supply shifts on price levels and inflation.
Verified Answer
GY
Gillian YoungMay 20, 2024
Final Answer :
C
Explanation :
With a rightward shift in the aggregate demand curve, there is an increase in the overall demand for goods and services in the economy. This leads to a higher level of output and, in a tight labor market, an increase in wages as firms compete for workers. The increased demand for goods and services also puts upward pressure on prices, leading to demand-pull inflation. Therefore, choice C is the most accurate statement.
Learning Objectives
- Understand the impact of aggregate demand and supply shifts on price levels and inflation.