According to the demand-pull theory of inflation, what is responsible for inflation?

Producers increase production to meet existing demand.

Consumers have too little money to spend.

Prices tend to rise if businesses cannot produce the quantity demanded by consumers.

The supply of goods causes prices to drop.

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Evan Wiley

25 October, 12:06

According to the demand-pull theory of inflation, what is responsible for inflation?

Producers increase production to meet existing demand.

Consumers have too little money to spend.

Prices tend to rise if businesses cannot produce the quantity demanded by consumers.

The supply of goods causes prices to drop.

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Answers (2)

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Tiana Morrison · Answer 1

Prices tend to rise if businesses cannot produce the quantity demanded by consumers is responsible for the inflation. Demand-pull Inflation is asserted to arise when aggregate demand in an economy outpaces aggregate supply.

Aleah Koch · Answer 2

The correct answer among the choices provided is the third option. Prices tend to rise if businesses cannot produce the quantity demanded by consumers. There will be changes in the competitive market according to the demand-pull theory. This will affect the valuation of new products.