According to the dynamic AD-AS model, what is the most common cause of inflation? A. AD increases by more than LRAS. B. Total spending increases faster than total production. C. The U. S. Mint prints too much currency. D. All of the above. E. A and B only.

Option E

Explanation:

Inflation is an economic term that refers to a situation of continuous increase in the price level of goods and services. Inflation can either be as a result of a rise in demand or due to a rise in the production cost.

When the available resources in the economy are used in the production process, such economy will have little supply of products in the long run.

When there is an increase in aggregate demand as a result of other factors apart from the price of the product, there will be a rightward shift of the aggregate demand curve on the LRAS.

The rightward shift in aggregate demand curve will result into an increase in price but the quantity supplied does not increase which leads to inflation.