If the economy experiences inflation and economic growth, this means that aggregate demand grows by more than aggregate supply.

Question

Quizplus · Accepted Answer

Inflation occurs when the overall price level increases, which can happen when aggregate demand exceeds aggregate supply. Economic growth can also contribute to inflation if the increase in demand for goods and services outpaces the increase in supply. Therefore, if both inflation and economic growth are occurring, it suggests that aggregate demand is growing faster than aggregate supply.

If the Economy Experiences Inflation and Economic Growth, This Means