Refer to the diagram and assume that prices and wages are flexible both upward and downward in the economy. In the extended AD-AS model:
A. demand-pull inflation would involve a rightward shift of curve A, followed by a rightward
shift of curve C.
B. cost-push inflation would involve first a leftward shift of curve C, then a rightward shift of curve C.
C. recession would involve a leftward shift of curve A, followed by a leftward shift of curve C.
D. recession would involve a rightward shift of curve D, followed by leftward shifts of curves A
and C.
B. cost-push inflation would involve first a leftward shift of curve C, then a rightward shift of curve C.
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The debt service ratio is the ratio of
(a) external debt to the size of the service sector. (b) external debt to total GNP. (c) internal debt to the size of the service sector. (d) internal debt to total GNP. (e) none of the above.
Because resources are scarce relative to wants, the study of economics concerns
A) how money is important to people. B) how individuals, businesses, and governments make choices. C) how money is used to buy what people want. D) None of the above are correct.