Demand-pull inflation is caused by:
A) an increase in aggregate demand.
B) an decrease in aggregate demand.
C) an increase in aggregate supply.
D) an decrease in aggregate supply.

Question

Quizplus · Accepted Answer

Demand-pull inflation is caused by an increase in aggregate demand. This can happen due to factors such as government spending, a decrease in taxes, or an increase in consumer confidence, which leads to increased spending. As demand increases, firms may respond by increasing their prices, which can lead to inflation.

Demand-Pull Inflation Is Caused By