With mild demand-pull inﬂation, the economy's output level would tend to be
A) pulled up by the increase in total spending.
B) pulled down by the decrease in total spending.
C) pulled up by the rising unemployment.
D) pulled down by the rising unemployment.

Question

Quizplus · Accepted Answer

With mild demand-pull inflation, there is an increase in total spending, which leads to an increase in demand for goods and services. As a result, producers increase their output to meet the higher demand, which pulls up the economy's output level.

With Mild Demand-Pull Inﬂation, the Economy's Output Level Would Tend