Demand-pull inflation can start when
A) the money wage rate rises but the price level does not change.
B) the money wage rate rises faster than the price level.
C) the short-run aggregate supply curve shifts rightward.
D) the aggregate demand curve shifts rightward.

Question

Quizplus · Accepted Answer

Demand-pull inflation occurs when aggregate demand in an economy outpaces aggregate supply, leading to an increase in prices. This can happen for various reasons, including increased consumer spending, government spending, and investment. The most direct cause of demand-pull inflation is when the aggregate demand curve shifts rightward, indicating an increase in the demand for goods and services at every price level.

Demand-Pull Inflation Can Start When