Continuous inflation in the long run requires repeated ________ shifts of the AD curve caused by a continuous increase in the ________.
A)leftward;government expenditures
B)rightward;nominal money supply
C)inward;nominal money supply
D)None of the above,inflation is primarily a supply side phenomenon.

Question

Quizplus · Accepted Answer

In the long run, continuous inflation can only be sustained by a continuous increase in the nominal money supply, which shifts the AD curve rightward. This is because in the long run, prices will adjust to changes in the money supply, which means that higher nominal aggregate demand can only lead to higher prices and not higher output.

Continuous Inflation in the Long Run Requires Repeated ________ Shifts