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12.   Demand-pull inflation is accompanied by: A.  Increasing unemployment B.  Decreasing input prices C.  Increasing production of goods and...

12.   Demand-pull inflation is accompanied by:
A.  Increasing unemployment
B.  Decreasing input prices
C.  Increasing production of goods and services
D.  Decreasing demand
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Answer #1

The increase in the rate of inflation caused by an increase in aggregate demand is called Demand-pull inflation. When the aggregate demand is greater than the aggregate supply, the price level increase. Such situation is known as Demand-pull inflation. The increase in price gives more profit to the firms. Then they expand production. Thus a Demand-pull inflation is accompanied by increase in the production of goods and services.

Answer: c. increasing the production of goods and services.

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