Which of the following economic conditions is likely to lead to demand-pull inflation?

Which of the following economic conditions is likely to lead to demand-pull inflation?
A . An increase in interest rates and a rise in the world price of oil
B . An increase in government spending and firms operating at full capacity
C . Increased monopoly power in goods and labor markets
D . A worsening balance of payments deficit and a rising exchange rate

Answer: B

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