Demand-pull inflation is worse for an economy than cost-push inflation because in addition to higher prices, demand-pull inflation also reduces employment.

Question

Quizplus · Accepted Answer

Demand-pull inflation is generally associated with economic growth and can lead to higher employment, as it is driven by increased demand for goods and services. Cost-push inflation, on the other hand, can lead to stagflation, where prices rise while employment and economic growth stagnate.

Demand-Pull Inflation Is Worse for an Economy Than Cost-Push Inflation