Question

Explain any three causes of demand-pull inflation.

Answer 1

Pull-based demand The term "inflation" describes the rise in commodity prices as a result of an increase in overall demand over the economy's total supply. 

The three causes of demand-pull inflation are as follows:

1. Increase in disposal income: Demand-pull inflation is the result of rising consumer demand for goods and services as disposable income rises.
2. Increase in population: It is the primary factor in the price increase. The demand for consumer products rises in response to population growth. It puts pressure on the availability of goods and services, which leads to demand-driven inflation.
3. Increase in money supply: It is among the main reasons why demand-pull inflation occurs. A rise in the money supply causes aggregate demand to rise.