Demand-pull inflation occurs when
A)increases in aggregate demand are not matched by increases in aggregate supply.
B)increases in aggregate supply outstrip increases in aggregate demand.
C)aggregate demand falls more rapidly than aggregate supply.
D)long-run aggregate demand rises faster than short-run aggregate supply.

Question

Quizplus · Accepted Answer

Demand-pull inflation is caused by an increase in aggregate demand that outpaces aggregate supply, leading to an increase in prices. Option A describes this scenario, while the other options do not fit the definition of demand-pull inflation.

Demand-Pull Inflation Occurs When