A Fall in Aggregate Demand Could Induce a Lengthy Recession At point a spending is growing at a rate of 10% and real growth is 3% so inflation is 7%. Suppose spending growth decreases to 5%. In the short run, wages are sticky so although spending growth declines, wage growth does not. As a result, real growth falls to -1% and the inflation rate falls to 6% at point b. In the long run as wages become unstuck the economy will move to a new long-run equilibrium at c but getting to point c could take a lengthy recession.