Question

Use the drop-down menus to complete the statements. when people have more money and eagerly spend it, this increases . this leads to inflation. when the prices of raw materials or labor increase, this causes an increase in , resulting in for consumers.

Answer 1

When people have more money and eagerly spend it, this increases demand, whereas demand-pull leads to inflation.

What is demand-pull inflation?

Demand-pull inflation is a monetary phenomenon where demand exceeds supply and increases prices.

• When the prices of raw materials/labor increase, it leads to an increase in the costs of production and results in higher prices for the consumers.

In conclusion, when people have more money and eagerly spend it, this increases demand, whereas demand-pull leads to inflation.

Learn more about demand-pull inflation here:

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