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JAMB Economics 1986 Question 37

Question 37

Money and Inflation

Which of the following causes of inflation is related to demand-pull inflation?

  1. A.Low productivity on farms and in firms
  2. B.Poor storage facilities
  3. C.Poor distribution system
  4. D.Increase in government expenditure on construction.
Show the answer and explanation

Answer: D (Increase in government expenditure on construction.)

Explanation

Demand-pull inflation happens when total spending rises faster than output. Extra government spending raises demand; the other options reduce supply.