An economy experiences real growth over time with stable aggregate demand. This would likely result in
A) increasing prices.
B) decreasing prices.
C) secular inflation.
D) increased unemployment.

Question

Quizplus · Accepted Answer

With stable aggregate demand, real growth over time would lead to an increase in supply that would outpace the demand, leading to a decrease in prices (deflation). Increasing prices (A) would be indicative of high inflation, and secular inflation (C) refers to a long-term increase in prices due to factors such as an increase in the money supply. Increased unemployment (D) would not be directly related to real growth over time.

An Economy Experiences Real Growth Over Time with Stable Aggregate