In the dynamic aggregate demand and aggregate supply model, inflation occurs if
A)AD shifts faster than SRAS.
B)AD shifts slower than SRAS.
C)SRAS shifts faster than AD.
D)LRAS shifts faster than AD.
E)LRAS shifts faster than SRAS.

Question

Quizplus · Accepted Answer

Inflation occurs when the aggregate demand (AD) increases or shifts to the right faster than the short-run aggregate supply (SRAS), leading to higher prices for the same level of goods and services.

In the Dynamic Aggregate Demand and Aggregate Supply Model, Inflation