Demand- pull inflation occurs when
A) aggregate supply and aggregate demand decrease persistently.
B) oil prices increase substantially.
C) the government increases its expenditures.
D) aggregate demand increases persistently.

Question

Quizplus · Accepted Answer

Demand-pull inflation occurs when there is an increase in aggregate demand, which leads to an increase in prices as the quantity of goods and services demanded exceeds the available supply. This can be caused by factors such as increases in consumer spending, government spending, or exports, or a decrease in taxes.

Demand- Pull Inflation Occurs When