Demand-pull inflation results from continually increasing the quantity of money, which leads to a continually
A) decreasing long-run aggregate supply.
B) increasing aggregate supply.
C) decreasing aggregate demand.
D) increasing aggregate demand.

Question

Quizplus · Accepted Answer

Demand-pull inflation occurs when aggregate demand in an economy outpaces aggregate supply, leading to higher prices. Increasing the quantity of money in an economy typically boosts consumer and business spending, thereby increasing aggregate demand.

Demand-Pull Inflation Results from Continually Increasing the Quantity of Money