Supply side inflation can be caused by
A) a persistent increase in aggregate supply while aggregate demand remains unchanged.
B) a persistent decrease in aggregate supply while aggregate demand remains unchanged.
C) a persistent decrease in aggregate supply while aggregate demand has significant decreases.
D) a persistent increase in aggregate demand while aggregate supply remains unchanged.

Question

Quizplus · Accepted Answer

Supply side inflation occurs when there is a decrease in aggregate supply (the total supply of goods and services produced within an economy) while aggregate demand remains unchanged. This situation leads to higher prices because the demand for goods and services outstrips their supply.

Supply Side Inflation Can Be Caused by