Question

If Aggregate Demand (AD) is pushed into the steep portion of the SRAS Curve, the economy will experience:a. Inflationb. Unemploymentc. Inflation AND unemploymentd. Neither inflation not unemployment

Answer 1

a. Inflation

Step-by-step explanation:

A shift of AD to the right will move output closer to potential GDP and thus reduce unemployment, but this shift will also lead to a higher price level and upward pressure on inflation