Question

Typically, low inflation is a sign of

a healthy economy because it results from a steady rise in demand.
a healthy economy because it results from a steady rise in supply.
a struggling economy because it results from a steady fall in demand.
a struggling economy because it results from a steady fall in supply.

Answer 1

a healthy economy because it results from a steady rise in supply.

Explanation: If aggregate supply grows steadily (productivity and output rise), prices stay stable or rise only slowly (low inflation) even as the economy expands. Rising demand would tend to push inflation up; falling demand would signal a struggling economy.