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

Question

Quizplus · Accepted Answer

Demand-pull inflation occurs when there is an increase in aggregate demand, typically due to an increase in the quantity of money in the economy. This leads to higher demand for goods and services, pushing prices up.

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