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- Subject
- Inflation & Productivityeconomics-mcqs › inflation-productivity
- Published
- 1 Jun 2019
- Last updated
- 28 May 2026
Which of the following can trigger 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 exceeds aggregate supply. A decrease in interest rates lowers borrowing costs, encouraging more spending and investment, which boosts demand and can lead to demand-pull inflation. The other options either affect costs or supply, not demand.
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.If both borrowers and lenders agree on a nominal interest rate, but the actual inflation rate ends up being lower than expected, who benefits from this outcome?