Question

_______ inflation can be explained by an ________ shift in the aggregate _________ curve.

a. Cost-push, rightward, supply
b. Demand-pull, leftward, demand
c. Demand-pull, leftward, supply
d. Cost-push, rightward, supply

Answer 1

Answer: Demand-pull, leftward, demand.

Explanation: DEMAND-PULL inflation can be explained by an LEFTWARD shift in the aggregate DEMAND curve.

In a Demand-pull inflation an increase demand leads to an equivalent increase in price which leads to a rise on the demand curve.