In which of the following sets of circumstances can we confidently expect inflation?
A)aggregate supply and aggregate demand both increase
B)aggregate supply and aggregate demand both decrease
C)aggregate supply decreases and aggregate demand increases
D)aggregate supply increases and aggregate demand decreases

Question

Quizplus · Accepted Answer

When aggregate supply decreases and aggregate demand increases, it creates a situation known as demand-pull inflation. This occurs when there is more demand for goods and services than the economy can supply, which leads to an increase in prices as businesses try to meet the higher demand by charging more.

In Which of the Following Sets of Circumstances Can We