Inflation in the short run is most likely to result from a(n):
A) Increase in aggregate demand or aggregate supply
B) Decrease in aggregate demand or aggregate supply
C) Increase in aggregate demand or a decrease in aggregate supply
D) Decrease in aggregate demand or an increase in aggregate supply

Question

Quizplus · Accepted Answer

Inflation in the short run is most likely to result from an increase in aggregate demand or a decrease in aggregate supply. An increase in aggregate demand causes a shortage in the market that raises the prices of goods and services. A decrease in aggregate supply limits the availability of goods and services, which also raises prices. Therefore, only choice C represents the correct answer.

Inflation in the Short Run Is Most Likely to Result