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

4503 Views

See similar Economics GCSE tutors

Related Economics GCSE answers

All answers ▸

Explain one possible effect on the equilibrium market price of an increase in production costs for firms


Explain why income tax in the UK is an example of progressive taxation.


Following a period of negative economic growth, explain how total government spending and tax revenues are likely to be affected.


What are the factors affecting the price elasticity of demand?


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