A sudden increase in aggregate demand causes a ________ inflation and ________ output.
A) demand-pull; lower
B) cost-push; higher
C) demand-pull; higher
D) cost-push; lower

Question

Quizplus · Accepted Answer

A sudden increase in aggregate demand causes demand-pull inflation, which is an overall rise in prices due to increased demand for goods and services. As a result, businesses will produce more to meet the demand, and output will increase as well.

A Sudden Increase in Aggregate Demand Causes a ________ Inflation