Inﬂation that occurs when total spending is greater than the economy's ability to produce output at the existing price level is
A) anticipated inﬂation.
B) demand-pull inﬂation.
C) cost-push inﬂation.
D) unanticipated inﬂation.

Question

Quizplus · Accepted Answer

This type of inflation is known as demand-pull inflation. It happens when the demand for goods and services increases, causing the prices to increase along with it. The economy is unable to produce enough output to satisfy the increased demand, leading to a situation where too much money tries to buy too few goods.

Inﬂation That Occurs When Total Spending Is Greater Than the Economy's