If the economy is producing at capacity and consumers are willing and able to buy more even more goods,this may cause
A)Demand-pull inflation.
B)Cost-push inflation.
C)Supply-side inflation.
D)The price effect.

Question

Quizplus · Accepted Answer

When the economy is producing at full capacity and there is high demand for goods, it can lead to demand-pull inflation. This happens when prices of goods and services rise because of the high demand and limited supply. As consumers compete for the available goods, sellers can raise prices to maximize profits. Ultimately, this leads to a general rise in the overall price level in the economy.

If the Economy Is Producing at Capacity and Consumers Are