Question

Demand-pull inflation can start when O A. unemployment is above the natural rate O B. aggregate supply decreases. O C. people incorrectly forecast inflation. O D. input costs rise. O E. aggregate demand increases.

Answer 1

a) A demand pull inflation can start when aggregate demand increases and there is not enough supply to fulfil that demand. The answer is "E".

b) "B"

Pakistan is experiencing a cost pull inflation in the market were the cost of the raw material and other inputs are rising. The answer is "B".