If an increase in investment causes an increase in real output beyond the full-employment level,the result will be
A)Demand-pull inflation.
B)An increase in the recessionary GDP gap.
C)Cost-push inflation.
D)An increase in undesired inventories.

Question

Quizplus · Accepted Answer

If an increase in investment causes an increase in real output beyond the full-employment level, it means that there is an excess demand for goods and services. This can lead to demand-pull inflation which occurs when the aggregate demand exceeds the aggregate supply.

If an Increase in Investment Causes an Increase in Real