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WAEC Economics 1996 Question 24

Question 24

Money and Inflation

Demand-pull inflation results when there is

  1. A.Inadequate improvement in the wage rate of workers
  2. B.excessive demand due to high purchasing power
  3. C.excessive supply of raw materials for production
  4. D.rise in the productivity of the factors of production
  5. E.excessive rise in the standard of living
Show the answer and explanation

Answer: B (excessive demand due to high purchasing power)

Explanation

Demand-pull inflation is 'too much money chasing too few goods': aggregate demand exceeds supply.