If the economy is operating at full employment when its aggregate demand curve is AD2, then a further increase in consumption and investment spending will cause:
Refer to the figure above.
A. Cost-push inflation, and the new equilibrium output will be less than Q2
B. Demand-pull inflation, and the new equilibrium output will be less than Q2
C. Demand-pull inflation, and the new equilibrium output will be more than Q2
D. Cost-push inflation, and the new equilibrium output will be more than Q2
C. Demand-pull inflation, and the new equilibrium output will be more than Q2
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Out of a set of feasible alternatives, an optimizer should choose the alternative with the:
A) highest net benefit. B) highest opportunity cost. C) lowest total cost, regardless of benefit. D) highest total benefit, regardless of cost.
A consumer chooses an optimal consumption point where the
a. marginal rate of substitution is maximized. b. rate at which the consumer is willing to trade one good for another equals the price ratio. c. price ratio is minimized. d. All of the above are correct.