If spending in an economy increases by 3 percent and real GDP increases by 1 percent, the result will be

Name: If spending in an economy increases by 3 percent and real GDP increases by 1 percent, the result will be
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When spending in an economy increases by a greater percentage than real GDP, it leads to an increase in prices and inflation. A 3 percent increase in spending and only a 1 percent increase in real GDP indicates that demand is increasing faster than supply, which will lead to inflation.

If Spending in an Economy Increases by 3 Percent and Real