For an economy to experience both economic growth and inflation at the same time
A) the aggregate supply curve must shift to the right.
B) the aggregate supply curve must shift to the left.
C) the aggregate demand curve must shift to the left.
D) the aggregate demand curve must shift to the right.

Question

Quizplus · Accepted Answer

In order for an economy to experience both economic growth and inflation at the same time, the aggregate demand curve must shift to the right. This is because an increase in aggregate demand will lead to an increase in both real GDP and prices. As output increases due to economic growth, demand for goods and services will increase, putting upward pressure on prices, resulting in inflation.

For an Economy to Experience Both Economic Growth and Inflation