Inflation in the short run is most likely to result from a(n)

Multiple Choice
increase in aggregate demand or aggregate supply.
decrease in aggregate demand or aggregate supply.
increase in aggregate demand or a decrease in aggregate supply.
decrease in aggregate demand or an increase in aggregate supply.

1 answer

Inflation in the short run is most likely to result from an increase in aggregate demand or a decrease in aggregate supply.

When aggregate demand increases, it leads to higher overall demand for goods and services, which can put upward pressure on prices, resulting in inflation. Conversely, a decrease in aggregate supply (due to factors like increased production costs or reduced availability of inputs) can also lead to higher prices, as there are fewer goods available in the market relative to demand.

So the best answer is: increase in aggregate demand or a decrease in aggregate supply.