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- Subject
- Inflation & Productivityeconomics-mcqs › inflation-productivity
- Published
- 1 Jun 2019
- Last updated
- 28 May 2026
Under which condition is an increase in aggregate demand most likely to cause demand-pull inflation?
Multiple choice question for Inflation & Productivity. Select an option, then review the explanation below.
Explanation
Demand-pull inflation occurs when aggregate demand rises but aggregate supply cannot increase output. This situation is most likely when aggregate supply is perfectly inelastic, meaning the total output cannot expand, leading to higher prices as demand grows.
More Inflation & Productivity MCQs
Practice related questions from the same subject.
- 1.According to the Phillips curve theory, when does unemployment revert to its natural rate?
- 2.What do menu costs signify in the context of inflation?
- 3.What is the effect of a rise in production costs on the economy?
- 4.What is the likely effect on the economy when injections into it increase?
- 5.Which of the following can trigger demand-pull inflation?