Demand-pull inflation can result when
A)policymakers set an unemployment target that is too high.
B)a persistent budget deficit is financed by selling bonds to the public.
C)a persistent budget deficit is financed by selling bonds to the central bank.
D)workers get numerous wage increases.

Question

Quizplus · Accepted Answer

Demand-pull inflation occurs when the demand for goods and services exceeds the supply, leading to higher prices. Financing a persistent budget deficit by selling bonds to the central bank can increase the money supply, boosting demand and potentially causing demand-pull inflation.

Demand-Pull Inflation Can Result When