With mild demand-pull inflation, the economy's output level would tend to be:
A) Pulled up by the increase in total spending
B) Pulled down by the decrease in total spending
C) Pulled up by the rising unemployment
D) Pulled down by the rising unemployment

Question

Quizplus · Accepted Answer

Mild demand-pull inflation occurs when total spending in the economy increases moderately. As a result, there is upward pressure on prices, but economic output levels tend to rise as well since producers can respond to the increased demand by producing more goods and services. Therefore, with mild demand-pull inflation, the economy's output level would tend to be pulled up by the increase in total spending.

With Mild Demand-Pull Inflation, the Economy's Output Level Would Tend