An increase in injections into the economy may lead to:
A)an outward shift of aggregate demand and demand-pull inflation
B)an outward shift of aggregate demand and cost-push inflation
C)an outward shift of aggregate supply and demand-pull inflation
D)an outward shift of aggregate supply and cost-push inflation

Question

Quizplus · Accepted Answer

An increase in injections into the economy, such as government spending, investments, and exports, can lead to an increase in aggregate demand. This can cause the aggregate demand curve to shift outward, potentially leading to demand-pull inflation if the economy is near or at full capacity. Demand-pull inflation occurs when the demand for goods and services exceeds the economy's ability to supply them, leading to an increase in prices.

An Increase in Injections into the Economy May Lead To