WAEC Economics 1988 Theory question 105

(a) Demand-pull inflation is a persistent rise in the general price level caused by aggregate demand exceeding aggregate supply – 'too much money chasing too few goods' (e.g. from wage increases, government spending, credit expansion).
(b) Price control is unsuitable because:
- It treats the symptom (high prices), not the cause (excess demand).
- Fixed low prices raise quantity demanded further while discouraging supply, so shortages worsen.
- It leads to black markets, hoarding and smuggling.
- It is hard and costly to enforce.
- Better remedies cut demand: higher taxes, less government spending, tighter credit, higher interest rates.

Link the remedy to the cause: reduce demand.