If everything else is held constant, which of the following would NOT lead to short-term inflation?
A)An increase in the growth rate of aggregate supply
B)An increase in the nominal money supply
C)An increase in consumer spending
D)An increase in government spending

Question

Quizplus · Accepted Answer

An increase in the growth rate of aggregate supply would lead to a decrease in prices and a leftward shift in the aggregate demand curve, which would lead to lower inflation. On the other hand, the other options (B, C, and D) would increase demand and/or the money supply, leading to increased inflation.

If Everything Else Is Held Constant, Which of the Following