Demand-pull inflation may be caused by:
A)An increase in costs
B)A reduction in interest rates
C)A reduction in government spending
D)An outward shift in aggregate supply

Question

Quizplus · Accepted Answer

Demand-pull inflation is typically caused by an increase in demand across the economy, which can be spurred by a reduction in interest rates. Lower interest rates make borrowing cheaper, encouraging consumers and businesses to spend and invest more, thus increasing demand.

Demand-Pull Inflation May Be Caused By