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

Question

Quizplus · Accepted Answer

An increase in government expenditure can lead to an increase in consumer demand for goods and services, causing an increase in prices. This is because consumers have more money to spend, leading to an increase in demand for products, and firms may not be able to keep up with the higher demand without raising prices. This is known as demand-pull inflation. The other choices have opposite effects, decreasing aggregate demand and reducing inflationary pressures.

Demand Pull Inflation Can Be Started by