In demand- pull inflation, at the start
A) the price level changes but real GDP remains the same.
B) the price level and real GDP both increase.
C) the price level rises and real GDP decreases.
D) None of the above answers is correct.

Question

Quizplus · Accepted Answer

In demand-pull inflation, there is an increase in aggregate demand which leads to an increase in both the price level and real GDP. Therefore, the correct option is B.

In Demand- Pull Inflation, at the Start