The U.S. economy has had persistent inflation in recent decades. A possible explanation for the inflation is that
A) there have been decreases in the growth rate while aggregate demand has remained unchanged.
B) there have been increases in the growth rate while aggregate demand has remained unchanged.
C) there have been decreases in aggregate demand while aggregate supply has remained unchanged.
D) growth in aggregate demand has been greater than growth in aggregate supply.

Question

Quizplus · Accepted Answer

Persistent inflation can occur when growth in aggregate demand exceeds growth in aggregate supply, leading to an increase in prices. This means that demand pulls prices up faster than the economy can produce goods and services to meet that demand.

The US Economy Has Had Persistent Inflation in Recent Decades