Answer to Question #339023 in Macroeconomics for Nozi

Question

Which of the following can cause demand-pull inflation? [1] A decrease in interest rates which leads to an increase in consumption and investment spending. [2] An increase in government spending on social wealth and education. [3] A rise in the cost of imported intermediate goods due to a depreciation of the domestic currency.

Answer 1

[1] A decrease in interest rates which leads to an increase in consumption and investment spending.