Increases in the quantity of money can start a ________ inflation and an increase in government expenditure can start a ________ inflation.
A)demand-pull; demand-pull
B)demand-pull; cost-push
C)cost-push; cost-push
D)cost-push; demand-pull
E)None of the above are correct because increases in the quantity of money are necessary to continue an inflation but cannot start an inflation.

Question

Quizplus · Accepted Answer

Increases in the quantity of money can lead to demand-pull inflation as more money in the economy increases demand for goods and services. Similarly, an increase in government expenditure can also lead to demand-pull inflation by increasing overall demand in the economy.

Increases in the Quantity of Money Can Start a ________