Demand-pull inflation could start with
A) an increase in government expenditure followed by an increase in the money wage rate.
B) an increase in the quantity of money followed by a decrease in the money wage rate.
C) a rise in prices of raw materials followed by an increase in the quantity of money.
D) a decrease in exports followed by a decrease in the quantity of money.

Question

Quizplus · Accepted Answer

Demand-pull inflation occurs when aggregate demand in an economy outpaces aggregate supply. An increase in government expenditure can boost aggregate demand, leading to higher prices and potentially causing demand-pull inflation.

Demand-Pull Inflation Could Start with