Whenever the general level of prices rises because of continual increases in aggregate demand,we say that the economy is experiencing
A)cost-push inflation.
B)monetary stagflation.
C)demand-pull inflation.
D)aggregate supply shock.

Question

Quizplus · Accepted Answer

When the general level of prices rises due to continual increases in aggregate demand, it is known as demand-pull inflation. This type of inflation occurs when the demand for goods and services in an economy exceeds its supply, leading to an increase in prices. As a result, businesses may increase their production levels to meet the demand, but this can lead to higher costs of production and further price increases. Ultimately, demand-pull inflation can lead to a decrease in purchasing power and a reduction in economic growth.

Whenever the General Level of Prices Rises Because of Continual