Too much spending will cause
A) cost-push inflation.
B) aggregate supply to increase.
C) demand-pull inflation.
D) aggregate supply to decrease.

Question

Quizplus · Accepted Answer

Too much spending can lead to an increase in overall demand for goods and services, causing demand-pull inflation. This occurs when the demand for goods and services exceeds the supply available, causing prices to rise. Cost-push inflation occurs when production costs increase and businesses increase prices to maintain their profit margins. Increased aggregate supply occurs when there is an increase in the quantity of goods and services produced and supplied in the economy, and decreased aggregate supply occurs when there is a decrease in the quantity of goods and services produced and supplied in the economy.

Too Much Spending Will Cause