Demand-side inflation is usually accompanied by increasing real GDP, while supply-side inflation is usually accompanied by falling real GDP.

Question

Quizplus · Accepted Answer

Demand-side inflation occurs when aggregate demand in an economy outpaces aggregate supply, often leading to increased economic activity and higher real GDP. Conversely, supply-side inflation is typically caused by a decrease in aggregate supply due to factors like higher production costs or shortages, which can reduce economic output and lead to falling real GDP.

Demand-Side Inflation Is Usually Accompanied by Increasing Real GDP, While