Question

The aggregate demand in an economy severely outweighs the aggregate supply, is a situation occurs in which type of inflation in the economy?

A Cost Push Inflation Correct Answer Incorrect Answer
B Demand - Pull Inflation Correct Answer Incorrect Answer
C Hyperinflation Correct Answer Incorrect Answer
D Built-In inflation Correct Answer Incorrect Answer
E None of these Correct Answer Incorrect Answer

Solution

Demand Pull Inflation is a situation in which the increase in aggregate demand strongly outweighs the aggregate supply in the economy. It is when the product is highly demanded by the consumers and there is a shortfall in the production. The prices go up.

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