Respuesta :
A rise in aggregate demand is what triggers DEMAND-PULL INFLATION.
Therefore, variables like rising government expenditure, declining tax rates, rising wealth, rising consumer confidence, and rising money supply might all lead to demand-pull inflation.
What is DEMAND-PULL INFLATION ?
Demand-pull :When total demand exceeds total supply in an economy, inflation is said to result. As the economy travels along the Phillips curve, inflation will increase as real gross domestic product increases and unemployment decreases. This is sometimes referred to as "chasing too much money after too few goods."
- Price increases occur when supply is insufficient to meet demand. This inflation is driven by demand.
- In general, a low unemployment rate is undoubtedly a desirable thing, but because more people have money to spend, inflation may result from this.
- Even if more government spending benefits the economy, it can also cause shortages of some items and inflation.
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