Sustained inflation over many years is most likely due to increases in the money supply in excess of increases in potential output.

Question

Quizplus · Accepted Answer

Sustained inflation occurs when the overall price level continues to rise over time. This is typically caused by an increase in the money supply, which increases the amount of money available to purchase goods and services. As the demand for goods and services increases, prices go up. If the increase in the money supply continues to outpace increases in potential output, then sustained inflation is likely to occur.

Sustained Inflation Over Many Years Is Most Likely Due to Increases