If total demand in the economy increases while there are supply-side constraints, the economy will experience:
A)an increase in potential GDP.
B)deflation.
C)increases in government expenditure.
D)inflation.

Question

Quizplus · Accepted Answer

If total demand in the economy increases while there are supply-side constraints, it will lead to an increase in prices, which is known as inflation.

If Total Demand in the Economy Increases While There Are