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

4044 Views

See similar Economics GCSE tutors

Related Economics GCSE answers

All answers ▸

Evaluate the impact of a fall in the price of oil on the market for diesel cars


What is a general equilibrium in a market?


Explain the term Economies of Scale. You may use a diagram to help.


Why should the government consider the price elasticity of demand when imposing tax on goods?


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