____ inflation occurs when aggregate demand expands so much that equilibrium output exceeds full employment output and the price level rises.
A) Cost-push
B) Unnecessary
C) Overextended
D) Demand-pull

Question

Quizplus · Accepted Answer

Demand-pull inflation occurs when there is an increase in aggregate demand and output exceeds full employment output, causing prices to rise. This often happens during periods of economic expansion when consumer demand is strong and unemployment is low. Cost-push inflation, on the other hand, occurs when there is a decrease in aggregate supply due to an increase in production costs, such as wages or raw materials. Unnecessary and overextended are not commonly used terms to describe types of inflation.

____ Inflation Occurs When Aggregate Demand Expands So Much That