Changes in the AD-AS Model in the Short Run

Question 1

Which of the following could initiate inflation?

AA decrease in short-run aggregate supply or a decrease in aggregate demand

BAn increase in short-run aggregate supply or a decrease in aggregate demand

CA decrease in short-run aggregate supply or an increase in aggregate demand

DAn increase in short-run aggregate supply or an increase in aggregate demand

EOnly an increase in the long-run aggregate supply

Question 2

Use the graph to answer the question that follows.

LRAS SRAS. SRAS, Price Level PL, PL, AD Y Real GDP