Sustained inflation:
A) can occur as a result of changes in
$\vec { C }$ .
B) can occur as a result of changes in
$\vec { I }$ .
C) requires ongoing increases in the money supply.
D) can never occur.

Question

Quizplus · Accepted Answer

Sustained inflation occurs when the overall price level in an economy keeps rising over an extended period of time. This can happen when there is an expansionary monetary policy that leads to an increase in the money supply, which can lead to excess demand for goods and services, causing prices to rise. Therefore, sustained inflation requires ongoing increases in the money supply. Choices A and B are incorrect because changes in consumption or investment spending can cause short-term fluctuations in the overall price level but cannot sustain inflation in the long-run. Choice D is incorrect because sustained inflation is a well-documented phenomenon that has occurred in many countries at different times in history.

Sustained Inflation: A) Can Occur as a Result of Changes C⃗\vec { C }C

Sustained Inflation:
A) Can Occur as a Result of Changes $\vec { C }$