Inflation that occurs when total spending is greater than the economy's ability to produce output at the existing price level is:
A) Anticipated inflation
B) Demand-pull inflation
C) Cost-push inflation
D) Unanticipated inflation

Question

Quizplus · Accepted Answer

This type of inflation is called demand-pull inflation, as it occurs due to an increase in aggregate demand that outstrips the economy's supply capacity. This can lead to a shortage of goods and services, which drives prices up.

Inflation That Occurs When Total Spending Is Greater Than the Economy's