Increases in the price level resulting from an excess of demand over output at the existing price level, caused by an increase in aggregate demand ?
Correct answer: A. Demand pull inflation
- A. Demand pull inflation
- B. Stagflation
- C. Both
- D. None
Explanation
Demand-pull inflation occurs when aggregate demand rises beyond the economy's current output capacity, allowing sellers to raise prices. Stagflation instead combines inflation with stagnant output and unemployment.
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