When there is demand-pull inflation, cyclical unemployment is high.

Question

Quizplus · Accepted Answer

Demand-pull inflation occurs when the demand for goods and services exceeds the supply, leading to an increase in prices. This type of inflation is typically associated with a strong economy and low levels of unemployment. In fact, demand-pull inflation often leads to a reduction in cyclical unemployment as companies ramp up production to meet the increased demand for their products, leading to increased hiring.

When There Is Demand-Pull Inflation, Cyclical Unemployment Is High