Increases in the quantity of money can start a ________ inflation and an increase in government expenditure can start a ________ inflation.
A) demand-pull; demand-pull
B) demand-pull; cost-push
C) cost-push; cost-push
D) cost-push; demand-pull

Question

Quizplus · Accepted Answer

Increases in the quantity of money typically lead to demand-pull inflation because more money in the economy boosts consumer demand for goods and services. Similarly, an increase in government expenditure can also lead to demand-pull inflation, as it raises the overall demand in the economy by increasing government spending.

Increases in the Quantity of Money Can Start a ________