Answer to Question #260549 in Macroeconomics for shon

Question

It is sometimes argued that economic growth that is “too rapid” will be associated with inflation. Use AD–AS analysis to show how this statement might be true. When this claim is made, what type of shock is implicitly assumed to be hitting the economy? 

Answer 1

When economic growth tends to be above trend rate of the long run, the inflation may take place. When economy is as a result of increase in aggregate demand faster compared to productive capacity.