if-aggregate-demand-shifts-more-than-short-run-aggregate-supply-what-is-the-like

Question

If aggregate demand shifts more than short-run aggregate supply, what is the likely outcome in the dynamic AD-AS model?

Accepted Answer

Inflation, due to higher price levels.

Answer

Economic equilibrium, with stable price levels.

Answer

Stagflation, due to stagnant economic growth.

Answer

Deflation, due to lower price levels.