Demand-pull inflation occurs
A) when the aggregate supply curve shifts to the left, while aggregate demand remains stable.
B) when the aggregate supply curve shifts to the right, while aggregate demand remains stable.
C) when the aggregate demand curve shifts to the left, while aggregate supply remains stable.
D) when the aggregate demand curve shifts to the right, while aggregate supply remains stable.

Question

Quizplus · Accepted Answer

Demand-pull inflation occurs when there is an increase in demand for goods and services, which leads to an increase in their prices. This increase in demand is typically caused by an increase in consumer spending, government spending, or investment. Therefore, option D is the correct choice as it describes an increase in aggregate demand while the aggregate supply remains stable.

Demand-Pull Inflation Occurs