If there are steady decreases in aggregate supply, the economy will experience
A) a slow decrease in price levels.
B) demand-side inflation.
C) an expansionary gap.
D) supply-side inflation.

Question

Quizplus · Accepted Answer

If there are steady decreases in aggregate supply, it means that the cost of producing goods and services has increased, leading to an increase in prices. This is known as supply-side inflation, as opposed to demand-side inflation, which is caused by an increase in aggregate demand.

If There Are Steady Decreases in Aggregate Supply, the Economy