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In the long run, demand-pull inflation leads to __________ in real output, __________ in employment levels,...

In the long run, demand-pull inflation leads to __________ in real output, __________ in employment levels, and __________ aggregate prices.

Group of answer choices

no change / no change / higher

no change / a decrease / lower

a decrease / an increase / lower

an increase / a decrease / higher

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Answer #1

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Answer Option A) no change , no change and increases.

In the long run, demand pull inflation leads to no change in real output , no change in employment but leads to increase in prices. The reason is that in long run there is full employment where aggregate demand is similar to aggregate supply and if afterwards there is increase in aggregate demand then income, output and employment Will not increase but price level will increase.

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