An expected rise in the rate of inflation for consumer goods will
A) decrease aggregate demand.
B) increase aggregate supply.
C) increase aggregate demand.
D) decrease aggregate supply.
E) increase unemployment.

Question

Quizplus · Accepted Answer

An expected rise in the rate of inflation for consumer goods will increase aggregate demand as consumers rush to purchase goods before prices rise even higher. This increase in demand will lead to an increase in the price level and a decrease in real GDP in the short run.

An Expected Rise in the Rate of Inflation for Consumer