Demand pull inflation can be started by
A) a decrease in net exports.
B) a decrease in the quantity of money.
C) an increase in government expenditure.
D) an increase in the price of oil

Question

Quizplus · Accepted Answer

An increase in government expenditure means that the government is spending more money, which increases demand for goods and services. This increase in demand can lead to a rise in prices and therefore, demand pull inflation. The other choices do not necessarily lead to demand pull inflation. A decrease in net exports (A) can lead to a decrease in demand, while a decrease in the quantity of money (B) can lead to deflation. An increase in the price of oil (D) can lead to cost-push inflation, not demand pull inflation.

Demand Pull Inflation Can Be Started by