If the economy is producing at capacity and consumers are willing and able to buy more,this may cause
A)Demand-pull inflation.
B)Cost-push inflation.
C)Supply-side inflation.
D)The price effect.

Question

Quizplus · Accepted Answer

When the economy is producing at capacity and consumers want to buy more, there is excess demand for goods and services which can lead to demand-pull inflation. This occurs when there is more demand for products and services than the economy can produce, resulting in a rise in prices.

If the Economy Is Producing at Capacity and Consumers Are