Graphically, demand-pull inflation is shown as a:
rightward shift of the AD curve along an upsloping [tex]A S[/tex] curve.
leftward shift of the AS curve along a down-sloping AD curve.
leftward shift of AS curve along an upsloping AD curve.
rightward shift of the AD curve along a down-sloping AS curve.

Question

27-11-2022
Social Studies

Answered

Graphically, demand-pull inflation is shown as a:
rightward shift of the AD curve along an upsloping [tex]A S[/tex] curve.
leftward shift of the AS curve along a down-sloping AD curve.
leftward shift of AS curve along an upsloping AD curve.
rightward shift of the AD curve along a down-sloping AS curve.

Answer :

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Tundexi Tundexi · Answer 1 · 2022-12-06T10:13:48-05:00

Graphically, a demand-pull inflation is shown as a rightward shift of the AD curve along an upsloping AS curve. The Option A is correct.

What is a demand-pull inflation?

Basically, a demand-pull inflation refers to when there is an increase in aggregate demand and the supply remains the same or decreases. When the supply cannot meet growing demand, the prices for goods and services are pulled higher.

As an inflation means general rise in the price of goods in an economy, the demand-pull inflation causes an upward pressure on prices due to shortages in supply, which a condition that economists describe as "too many dollars chasing too few goods." An increase in an aggregate demand can also lead to this type of inflation.

In Keynesian economics, an increase in the aggregate demand may be caused by a rise in employment, because the companies need to hire more people to increase their output. A tight labor market also means an higher wages which translates into greater demand.

Read more about demand-pull inflation

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