In the long run, persistent inflation in the United States is caused by
A) leftward shifts in both the long-run aggregate supply curve and in the aggregate demand curve.
B) rightward shifts in the long-run aggregate supply curve and the leftward shift of the aggregate demand curve.
C) a faster rightward shift of the aggregate demand curve than the rightward shift of the long-run aggregate supply curve.
D) leftward shifts in the aggregate demand curve while the position of the long-run supply curve is unchanged.

Question

Quizplus · Accepted Answer

Persistent inflation in the long run is primarily caused by the aggregate demand curve shifting to the right faster than the long-run aggregate supply curve. This means that demand for goods and services is increasing more rapidly than the economy's capacity to produce them, leading to upward pressure on prices.

In the Long Run, Persistent Inflation in the United States