Economic growth will NOT result in deflation if aggregate demand shifts
A) outward to the right at the same speed as aggregate supply.
B) inward to the left at the same speed as aggregate supply.
C) outward to the right as aggregate supply shifts inward to the left.
D) inward to the left as aggregate supply shifts outward to the right.

Question

Quizplus · Accepted Answer

When aggregate demand shifts outward to the right at the same speed as aggregate supply, it indicates that the increase in demand is matched by an increase in supply. This balance prevents deflation because prices tend to remain stable when supply meets demand. Deflation typically occurs when demand decreases relative to supply, not when both are increasing at the same pace.

Economic Growth Will NOT Result in Deflation If Aggregate Demand