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WAEC Economics 2018 Question 33

Question 33

Money and Inflation

Demand-pull inflation is likely to be caused by

  1. A.an increase in the cost of factor inputs.
  2. B.increase in the income tax rate.
  3. C.increase in bank lending rates.
  4. D.increasingly large budget deficit.
Show the answer and explanation

Answer: D (increasingly large budget deficit.)

Explanation

Deficit spending pumps more money into the economy and raises total demand.