The economy starts out at a full-employment equilibrium. Some events then occur that generate a demand-pull inflation. All of the following events except an increase in ________ might start a demand-pull inflation.
A)the money wage rate
B)exports
C)the quantity of money
D)government expenditure
E)transfer payments

Question

Quizplus · Accepted Answer

An increase in the money wage rate would not start a demand-pull inflation; instead, it might lead to cost-push inflation. Demand-pull inflation is typically initiated by an increase in aggregate demand, which can be caused by increases in exports, the quantity of money, government expenditure, or transfer payments.

The Economy Starts Out at a Full-Employment Equilibrium