What is demand pull inflation?

Inflation is a sustained increase in the average price level in a given time period.
Demand pull inflation refers to the economic scenario in which there is an increase in aggregate demand. This increase can be potentially caused the government's manipulation of taxes and government expenditure or the central bank's control of interest rates and the money supply.
This can be depicted on a diagram by a rightward shift in an aggregate demand (AD) curve. The increase in AD results in a subsequent increase in the economy's real output and average price level. The increase in average price level is known as the inflation.

Answered by Demi R. Economics tutor

3185 Views

See similar Economics GCSE tutors

Related Economics GCSE answers

All answers ▸

What are the Four factors of production?


Explain why a rise in GDP will lead to a rise in the standard of living


Describe how tariff could reduce imports.


What is a Macroeconomic consequence of an increase government spending?


We're here to help

contact us iconContact usWhatsapp logoMessage us on Whatsapptelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo
Cookie Preferences