Question

. Demand-pull inflation occurs when multiple choice 1 there is a negative GDP gap. there is a negative price gap. there are increases in per-unit costs of production. prices rise because of an increase in aggregate spending not fully matched by an increase in aggregate output. b. The type of inflation that is more likely to be associated with a negative GDP gap is multiple choice 2 demand-pull inflation. output inflation. cost-push inflation. international inflation. c. The type of inflation that is more likely to be associated with a positive GDP gap is multiple choice 3 cost-push inflation. demand-pull inflation. output inflation. international inflation.

Answer 1

When there prices rise because of an increase in aggregate spending not fully matched by an increase in aggregate output, then, an economy is experiencing a Demand-pull inflation.

The Demand-pull inflation is the type of inflation experienced as a result of an imbalance in aggregate supply and demand, thus, the prices go up because of aggregate demand which outweighs the aggregate supply.

Therefore, the Option C is correct because when there prices rise because of an increase in aggregate spending not fully matched by an increase in aggregate output, then, an economy is experiencing a Demand-pull inflation.

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