What will be the result in a growing economy if increases in aggregate demand outpace rightward shifts of the long-run aggregate supply curve?
A) secular deflation
B) inflation accompanied by declines in real GDP
C) inflation accompanied by increases in real GDP
D) a decline in consumption spending

Question

Quizplus · Accepted Answer

In a growing economy, if increases in aggregate demand outpace rightward shifts of the long-run aggregate supply curve, it leads to inflation accompanied by increases in real GDP. This is because the demand for goods and services is growing faster than the economy's ability to produce them, pushing prices up while also increasing production and real GDP.

What Will Be the Result in a Growing Economy If