A rightward shift in the aggregate demand curve is most likely to result in a. decrease in employment. b. inflation. c. deflation. d. recession.
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A rightward shift in the aggregate demand curve signals an increase in the total demand for goods and services in the economy. This often leads to higher consumption, increased investment, and government spending, which can push prices upward and create inflationary pressures as the economy operates closer to its production capacity. In real-world scenarios, policymakers often intervene in such instances. For example, central banks might consider adjusting interest rates to control inflation. If aggregate demand rises too quickly, the economy can overheat, leading to unsustainable growth. Balancing demand with supply becomes crucial to maintain economic stability and prevent inflation spikes.