Economics (AS & A Level) · May / June 2022 · Paper 14 · Question 24

The diagram shows an aggregate demand (AD) and an aggregate supply (AS) curve. There is a sustained rise in the prices of imported raw materials on which the economy depends. Assuming AD remains independent of AS, what are the most likely effects on the economy?

1. AAS decreases; price level falls
2. BAS increases; price level falls
3. CAS decreases; price level rises
4. DAS increases; price level rises

As printed in the paper