The United States is facing a large budget deficit that is only expected to increase as new social programs and unemployment benefits are offered to citizens. This budget deficit is more likely to produce a demand-pull inflation when:
A)Outsourcing leads to low employment
B)GDP is higher and unemployment is lower
C)GDP is lower and unemployment is higher
D)Foreign investment is limited to manufacturing

Question

Quizplus · Accepted Answer

This budget deficit is more likely to produce a demand-pull inflation when the GDP is higher and unemployment is lower.
Key Takeaway: Demand-pull inflation occurs when high demands lead to a higher GDP and lower unemployment. With too few supplies being chased by too much demand, such an inflation occurs.

The United States Is Facing a Large Budget Deficit That