Answer to Question #68152 in Macroeconomics for Willie

Question

4. Which of the following is/are true about inflation?
a) The reason for demand-pull inflation is that the demand expansion leads to the total demand curve shifting to the right.
b) The reason for demand-pull inflation is that rising cost of production makes the aggregate supply curve shift to the left
c) The reason for cost-push inflation is that demand expansion leads to the total demand curve shifting to the right.
d) The reason of cost-push inflation is that rising cost of production makes the aggregate supply curve shift to the left.

Answer 1

4. The correct answer is:
a) The reason for demand-pull inflation is that the demand expansion leads to the total demand curve shifting to the right.