Demand-pull inflation results from continually increasing the quantity of money, which leads to a continually
A) decreasing aggregate demand.
B) decreasing long-run aggregate supply.
C) increasing aggregate supply.
D) increasing aggregate demand.

Question

Quizplus · Accepted Answer

Demand-pull inflation results from increasing aggregate demand due to the increase in the quantity of money. As people have more money to spend, they are willing to pay higher prices for goods and services, which leads to an increase in demand and ultimately an increase in prices.

Demand-Pull Inflation Results from Continually Increasing the Quantity of Money