Inflation can be started by
A) a decrease in aggregate supply or a decrease in aggregate demand.
B) an increase in aggregate supply or a decrease in aggregate demand.
C) a decrease in aggregate supply or an increase in aggregate demand.
D) an increase in aggregate supply or an increase in aggregate demand.

Question

Quizplus · Accepted Answer

Inflation occurs when there is a sustained increase in the general price level of goods and services. This can be caused by a decrease in aggregate supply, meaning there are fewer goods and services available for purchase, or an increase in aggregate demand, meaning there is more demand for those goods and services than there is supply. However, an increase in aggregate supply or a decrease in aggregate demand would not typically lead to inflation.

Inflation Can Be Started by