If long-run economic growth is NOT accompanied by a change in aggregate demand, the result will be
A) persistent inflation.
B) secular deflation.
C) devaluation of the dollar.
D) appreciation of the dollar.

Question

Quizplus · Accepted Answer

If long-run economic growth is not accompanied by a change in aggregate demand, it can lead to secular deflation as the supply of goods and services increases but demand remains constant. This can lead to a decrease in prices over time, which can have negative effects on the economy such as an increase in debt burdens and a decrease in investment. Persistent inflation is unlikely in this scenario as there is no increase in aggregate demand. Devaluation or appreciation of the dollar is not directly related to this situation.

If Long-Run Economic Growth Is NOT Accompanied by a Change