Undesired inventory depletion results in demand-pull inflation.
Since spending exceeds production,inventory levels fall,which leads to an increase in production with the trade-off of higher inflation.

Question

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Undesired inventory depletion can lead to demand-pull inflation because as inventory levels fall, production needs to increase to meet demand. However, if spending exceeds production capacity, this can lead to an increase in prices and inflation.

Undesired Inventory Depletion Results in Demand-Pull Inflation