When the aggregate demand curve shifts to the right, intersecting the aggregate supply curve on its upward-sloping or vertical segment,
a. demand-pull inflation occurs.
b. cost-push inflation occurs.
c. stagflation occurs.
d. deflation occurs.
e. the shift pulls the price level down.
Question 2
Other things being equal, the quantity of money that people wish to hold in currency and their checking accounts can be expected to:
a. increase as the interest rate increases.
b. decrease as the interest rate increases.
c. decrease as real GDP increases.
d. none of these.
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