Mention the theory of inflation or price increase that results from so-called excess demand ?
Correct answer: C. Demand-pull inflation
- A. Demand curve theory
- B. Cost-push inflation
- C. Demand-pull inflation
- D. Demand push inflation
Explanation
Demand-pull inflation occurs when aggregate demand exceeds the economy's ability to produce goods and services, pushing prices upward. Cost-push inflation, by contrast, begins with rising production costs.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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