PRC-3 · Chapter 18 · Question 11 of 33
A government desperately prints massive amounts of new currency to fund its spending. With too much money circulating, consumer demand skyrockets far beyond what the factories can physically produce. The resulting price increases are known as:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Demand-pull inflation
Explanation
Demand-pull inflation occurs when aggregate demand outpaces aggregate supply, often summarized as 'too much money chasing too few goods'.
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