In the long run, demand-pull inflation:
A)increases unemployment.
B)decreases nominal wages.
C)decreases real output.
D)increases the price level.

Question

Quizplus · Accepted Answer

Demand-pull inflation is a situation where there is too much demand for goods and services in the economy, leading to an increase in prices. As prices increase, the value of money decreases, which leads to a decrease in purchasing power. In the long run, this can lead to an increase in the price level as well as inflation. However, demand-pull inflation does not necessarily decrease real output, decrease nominal wages, or increase unemployment.

In the Long Run, Demand-Pull Inflation