Demand-pull inflation is associated with
A)decreasing aggregate demand and lower unemployment
B)increasing aggregate demand and lower unemployment
C)decreasing aggregate demand and greater unemployment
D)increasing aggregate demand and greater unemployment
E)a rising price level caused by a shift in either aggregate demand or aggregate supply

Question

Quizplus · Accepted Answer

Demand-pull inflation is caused by increasing aggregate demand which leads to an increase in the price level without a corresponding increase in output. Lower unemployment is also associated with increasing aggregate demand, therefore, option B is the correct choice.

Demand-Pull Inflation Is Associated with