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

Question

Quizplus · Accepted Answer

Inflation can be started by a decrease in aggregate supply, which leads to a decrease in goods available for purchase, causing prices to go up. Additionally, an increase in aggregate demand can also lead to inflation as there is a larger demand for goods and services, causing prices to rise. However, the most common cause of inflation is a decrease in aggregate supply. Therefore, the correct answer is D) a decrease in aggregate supply or an increase in aggregate demand.

Inflation Can Be Started by