Demand- pull inflation could start with
A) increases in government expenditures followed by increases in the money wage rate.
B) rises in prices of raw materials followed by expansionary monetary policy.
C) simultaneous expansionary aggregate demand and aggregate supply shifts.
D) expansionary monetary policy followed by decreases in the money wage rate.

Question

Quizplus · Accepted Answer

Demand-pull inflation occurs when there is an increase in aggregate demand without a corresponding increase in aggregate supply. This can occur when government expenditures increase, which leads to an increase in aggregate demand. This increase in demand can lead to an increase in the money wage rate as firms compete for labor, causing costs to rise and pushing up prices. As a result, demand-pull inflation can start with an increase in government expenditures followed by an increase in the money wage rate.

Demand- Pull Inflation Could Start with