Which of the following can create demand-pull inflation?
A) Excessive aggregate spending.
B) Sharply rising oil prices.
C) Higher labour costs.
D) Recessions and depressions.

Question

Quizplus · Accepted Answer

Excessive aggregate spending, often coupled with strong economic growth, can create a situation where demand for goods and services exceeds supply, driving up prices and generating inflation. This is known as demand-pull inflation. Sharply rising oil prices and higher labor costs can also contribute to inflation, but they are not necessarily indicative of demand-pull inflation. Recessions and depressions tend to have the opposite effect, further weakening demand and contributing to deflationary pressures.

Which of the Following Can Create Demand-Pull Inflation