In the dynamic aggregated demand and aggregate supply model, inflation occurs if the aggregate demand shifts faster than the SRAS. Therefore, the option C holds true.
Inflation can be referred to or considered as a situation of price hike in the rates of commodity goods and services in an economy during a given period.
An inflation occurs at a much faster rate in an economy if the shift in the aggregate demand in an economy is also faster than the total SRAS of the economy during a given period.
Therefore, the option C holds true and states regarding the significance of inflation in a dynamic aggregated demand and aggregate supply model.
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The question seems to be incomplete. It has been added below for better reference.
In the dynamic aggregated demand and aggregate supply model, inflation occurs if
A. AD shifts slower than SRAS.
B. SRAS shifts faster than AD.
C. AD shifts faster than SRAS.
D. LRAS shifts faster than AD.
