Inflation occurs over time as a result of
A) long-run aggregate supply increasing faster than aggregate demand.
B) long-run aggregate supply increasing faster than short-run aggregate supply.
C) decreases in aggregate demand.
D) aggregate demand increasing faster than long-run aggregate supply.

Question

Quizplus · Accepted Answer

Inflation typically occurs when aggregate demand in an economy outpaces aggregate supply, leading to an overall increase in prices. This is because as demand for goods and services increases, prices rise when the supply does not keep up, reflecting the basic economic principle of supply and demand.

Inflation Occurs Over Time as a Result of