PRC-3 · Chapter 13 · Question 40 of 50
When the aggregate demand curve shifts to the right along the perfectly vertical section of the LRAS curve, what is the sole macroeconomic result?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) An increase in the overall price level (Inflation) with zero increase in output
Explanation
Because physical output cannot expand past the vertical full-employment limit, any further increases in demand purely pull prices upward, causing demand-pull inflation.
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