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.

DR
Answered by Demi R. Economics tutor

4100 Views

See similar Economics GCSE tutors

Related Economics GCSE answers

All answers ▸

Evaluate the use monetary policy to aid the economy's recovery just after a recession.


What are some main solutions for consumption negative externalities, such as smoking?


What are economies of scale?


Why does the demand curve slope downwards?


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2026 by IXL Learning