Over longer periods of time, any inflation that arises concurrently with economic growth is the result of which of the following?

Question

Multiple choice question.

Increases in aggregate demand that equal increases in aggregate supply

Increases in aggregate demand that outpace increases in aggregate supply

Decreases in aggregate supply that equal decreases in aggregate supply

Increases in aggregate supply that outpace increases in aggregate demand

Answer 1

The correct answer is:

Increases in aggregate demand that outpace increases in aggregate supply.

This scenario describes a situation where demand for goods and services grows faster than the economy's ability to produce them, leading to inflation even in a growing economy.