Question

If the economy grows steadily over several years and at the same time maintains the aggregate demand curve in its present position, then the economy will experience which of the following? secular deflation inflation a stable price level The price level cannot be determined without more information.

Answer 1

Answer:

If the economy grows steadily over several years and at the same time maintains the aggregate demand curve in its present position, then the economy will experience Secular Deflation

Explanation:

Secular deflation is a persistent decline in prices resulting from economic growth in the presence of stable aggregate demand.

In such an economy, the long term market activities or stocks are cyclical, therefore unlikely to be impacted by short-term trends.

There is a projection that Technology and automated systems which is fast replacing manual labor, making the cost of production cheaper and position the economy for growth will bring about secular deflation in the nearest future.

Answer 2

Answer:

Secular Deflation

Explanation:

The term secular deflation simply means continues or prolong decline in prices of goods and services resulting from economic growth in the presence of stable aggregate demand. So, in the face of stable economic growth and aggregate demand curve, the economy will experience secular deflation.