Question 1
Demand-pull inflation can be the result of
◦ a decrease in government spending.
◦ an increase in net taxes.
◦ a decrease in the
Z factors.
◦ All of these.
Question 2
Refer to the information provided in Figure 27.4 below to answer the question(s) that follow.
![](data:image/png;base64, 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)
![](data:image/png;base64, /9j/4AAQSkZJRgABAQAAAQABAAD/2wBDAAMCAgMCAgMDAwMEAwMEBQgFBQQEBQoHBwYIDAoMDAsKCwsNDhIQDQ4RDgsLEBYQERMUFRUVDA8XGBYUGBIUFRT/2wBDAQMEBAUEBQkFBQkUDQsNFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBQUFBT/wAARCAARAHQDASIAAhEBAxEB/8QAHwAAAQUBAQEBAQEAAAAAAAAAAAECAwQFBgcICQoL/8QAtRAAAgEDAwIEAwUFBAQAAAF9AQIDAAQRBRIhMUEGE1FhByJxFDKBkaEII0KxwRVS0fAkM2JyggkKFhcYGRolJicoKSo0NTY3ODk6Q0RFRkdISUpTVFVWV1hZWmNkZWZnaGlqc3R1dnd4eXqDhIWGh4iJipKTlJWWl5iZmqKjpKWmp6ipqrKztLW2t7i5usLDxMXGx8jJytLT1NXW19jZ2uHi4+Tl5ufo6erx8vP09fb3+Pn6/8QAHwEAAwEBAQEBAQEBAQAAAAAAAAECAwQFBgcICQoL/8QAtREAAgECBAQDBAcFBAQAAQJ3AAECAxEEBSExBhJBUQdhcRMiMoEIFEKRobHBCSMzUvAVYnLRChYkNOEl8RcYGRomJygpKjU2Nzg5OkNERUZHSElKU1RVVldYWVpjZGVmZ2hpanN0dXZ3eHl6goOEhYaHiImKkpOUlZaXmJmaoqOkpaanqKmqsrO0tba3uLm6wsPExcbHyMnK0tPU1dbX2Nna4uPk5ebn6Onq8vP09fb3+Pn6/9oADAMBAAIRAxEAPwD9U6KKKACiiigAooooA+Rvir+074s8C/tG+JvAd58Qfhn4F8P2Xh+31zT7zxTpNxLc3UkjvH9lULqMPmsDEzZjXdhlURk8n0z4aftB2t38OvG3i3xxruiW2neG9buNNuLnTtPv7QW4jWECKWG6jWVpzJJjEasG3xhdxJp9r8A9aX9pPxB8S7zxPpV9oGt6HF4fufDEugsWa2jLuhNwbkqW3yPuzDtKHbtB+evLvip8L9W+DX7PXxk/tfX9J8Qr4t1/+2Y5n8NlbTS5riaFS90JLqQfZozHGzTgq0Kq8gDMqgSm0l6P7+Zcq/8AAb67ed73qMVKWr+0vu5dX/4F/VtvULf9sf4Wz+J4fDr6h4hs9ZkvbXTvst/4P1m1Mdzc5+zxyGW0URmTDFd5GQpPQE1a1T9rj4V6F4e/t3VfEV1pOjrrb+HZr3UNFv7eK1v127op2eAeQPnX55NqHnDcHHyN8GPA/wASvi9r934eg8SfDOax0+7sPFg+IPgm91PxQjanazqILK8ub66Z5/3XmEQrMpiUq2QHCv7dffsceMp9Bv8AS4fihpUq3PjtfHi3Go+E2uHW5Dq/kMBeojRb1GPlBC8dcEaKO13a7/Dmgm7eS5352i+tme7t1/4EmvvfJ977XPVLf9qj4YXf9jPb+I5bm21VbRob2DS7yS1g+1bTbLczrCY7VpA6FVnaMkOpxgg1k/tIfEX4hfCzw/f+KfDTeG30jTUtVXR9WsppbvWrmWfy/s1vNHcIIHIaNULRS7nfoAvPO63+x5aaj8dNV+Iyv4M1f+2JLKe9sfFngyPVZreaBQjSWN19oje33qqnDCUKw3Adqs/HX9nv4p/E/wCJGl+JfCfxrg8B2GlQbLHSpPB1rqwhnYYkuA88uBKRlQyoGVCyg4d90ppOLa6/cvwv22635UJbvtZff/X66s5r4p/Ej9pnw38TtGstD074Y23hXxBrdvpWl2mppf3OseWYRJczuIZFhKRKk7k7l+VAMZYA97+1v+0Defs/fCzUdV0CwtdZ8XPZ3V1p+n3hPkiO3iMs88oUhvLRQoOCMvJGuQXBrqdB+Fepw/EfTPF/iLxIviK70zw8mi2kX9nrbiOdmVry84cgPOY4RtVQEWPAJ3GvKvjT+x1qvxt8Ma9b6z8QpW8T6g13YW2uC1u7dLLR5zu+wfZbS9t4pyrKh8ycSB9oDo2BiKkZcrhF99fuSXfXfpZX1vZMhbm5n5f5v7tuuqXRtn0R4X1OXW/DOkajOqJPd2cNxIsYIUM6BiBkk4yfWisb4U+C7v4d/DrQfDV9qn9tXWmWwt3v/wDSP32CcH/SJ55BwQMNK2McYGFBW07cz5djGlzKnHn3sr+p1lFFFQahRRRQAUUUUAFFFFABRRRQAUUUUAFFFFABRRRQB//Z)
Refer to Figure 27.4. If the economy is currently at the intersection of
AS and
AD, stagflation would be caused by
◦ an increase in
AS.
◦ a decrease in
AS.
◦ an increase in
AD.
◦ a decrease in
AD.