demand-pull inflation Flashcards
1
Q
demand-pull inflation
A
excess demand in the economy
2
Q
why does it occur?
A
when AD rises but there is no increase in AS
3
Q
what happens when there is too much demand?
A
prices rise
4
Q
where can it come from?
A
- consumer spending rises excessively - low interest rates
- firms increase spending on investments
- government increases spending or cutting taxes
- world demand for UK exports may be rising
- growth of the money supply
5
Q
how do banks cause an impact?
A
increased lending = money supply will grow
money will be spent = increased AD
