Demand-pull inflation is caused by
A) increases in wages, pushing prices higher.
B) increases in aggregate demand.
C) decreases in aggregate supply.
D) consumers demanding better quality, which increases costs.

Question

Quizplus · Accepted Answer

Demand-pull inflation is caused by an increase in aggregate demand, which leads to an increase in prices and inflation. It occurs when there is a shortage of goods and services in the economy, leading consumers to bid up prices. This may be caused by factors such as an increase in government spending, lower taxes, or an increase in consumer confidence.

Demand-Pull Inflation Is Caused by