Demand-side and supply-side inflations differ in that,in one case
A) total real output rises, and in the other, it falls.
B) the price level rises, and in the other, it falls.
C) borrowers benefit, and in the other, savers benefit.
D) businesses benefit, and in the other, householders benefit.
E) inflation is temporary, and in the other, it is permanent.

Question

Quizplus · Accepted Answer

Demand-side inflation typically occurs when aggregate demand in an economy outpaces aggregate supply, leading to an increase in prices and often an increase in real output as the economy operates closer to its capacity. On the other hand, supply-side inflation happens when there's a decrease in aggregate supply due to factors like increased production costs or shortages, which can lead to higher prices and a reduction in real output as the economy's ability to produce goods and services is constrained.

Demand-Side and Supply-Side Inflations Differ in That,in One Case