Suppose the Australian economy is initially in equilibrium and demand for resources from China continues to increase year on year. This may result in:
A) cost- push inflation
B) demand- pull inflation
C) a onetime increase in the price level
D) none of the above as the Australian resource sector can provide an unlimited supply of resources for China

Question

Quizplus · Accepted Answer

An increase in demand for resources from China can lead to demand-pull inflation in Australia, as higher demand for resources can drive up prices.

Suppose the Australian Economy Is Initially in Equilibrium and Demand