In the long run, demand-pull inflation leads to:
A) Higher unemployment and higher price level
B) Lower real wages and higher unemployment
C) Lower real output and no change in unemployment
D) Higher price level and no change in real output

Question

Quizplus · Accepted Answer

Demand-pull inflation is a type of inflation caused by an increase in demand that exceeds the available supply of goods and services. This leads to an increase in prices, but not necessarily a decrease in output or employment. Therefore, the best choice is D - higher price level and no change in real output.

In the Long Run, Demand-Pull Inflation Leads To