If the economy grows steadily over several years and at the same time maintains the aggregate demand curve in its present position, then the economy will experience which of the following?
A) inflation
B) a stable price level
C) secular deflation
D) The price level cannot be determined without more information.

Question

Quizplus · Accepted Answer

If the economy grows steadily, increasing its productive capacity, but aggregate demand remains unchanged, the increased supply of goods and services will lead to a decrease in the general price level, resulting in secular deflation.

If the Economy Grows Steadily Over Several Years and at the Same