Which one of the following can start a demand- pull inflation?
A)a sharp increase in the price of oil
B)a decrease in investment as a result of a decrease in expected future profits
C)a decrease in government expenditure on goods and services
D)a cut in the interest rate
E)higher wages negotiated by unions

Question

Quizplus · Accepted Answer

A cut in the interest rate can stimulate borrowing and spending, increasing demand for goods and services, which can lead to demand-pull inflation.

Which One of the Following Can Start a Demand- Pull