An increase in the price level caused by a rightward shift of the aggregate demand curve is called:
A) cost-push inflation.
B) supply shock inflation.
C) demand shock inflation.
D) demand-pull inflation.

Question

Quizplus · Accepted Answer

Demand-pull inflation occurs when there is an increase in aggregate demand, typically due to an increase in consumer spending, government spending, or investment. This causes an increase in the price level as producers try to meet the increased demand by raising prices. Cost-push inflation, on the other hand, is caused by an increase in the cost of production, while supply shock inflation is caused by a sudden disruption in supply, such as a natural disaster or geopolitical event. Demand shock inflation is not a commonly used term.

An Increase in the Price Level Caused by a Rightward