_____ inflation occurs when aggregate demand expands so much that equilibrium output exceeds full employment output.
A) Demand-pull
B) Demand-push
C) Cost-push
D) Cost-pull

Question

Quizplus · Accepted Answer

Demand-pull inflation occurs when there is an increase in aggregate demand, leading to an increase in prices. This happens when there is too much money in the economy chasing too few goods and services. This type of inflation can occur when there is a strong economy, low unemployment, and consumer spending is encouraged. As aggregate demand expands, equilibrium output can exceed full employment output, leading to demand-pull inflation.

_____ Inflation Occurs When Aggregate Demand Expands So Much That