Inflation that results from an increase in any of the components of aggregate demand is
A)demand-push inflation.
B)demand-pull inflation.
C)cost-push inflation.
D)cost-pull inflation.

Question

Quizplus · Accepted Answer

When there is an increase in any of the components of aggregate demand, such as consumption, investment, government spending, or net exports, it results in a situation where there is more demand for goods and services than there is supply. This leads to firms increasing their prices to match the increased demand, resulting in inflation. This type of inflation, caused by an increase in demand, is known as demand-pull inflation.

Inflation That Results from an Increase in Any of the Components