Explain the demand pull inflation, Microeconomics

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Explain the Demand Pull Inflation

Demand Pull Inflation:   Occurs when aggregate demand exceeds aggregate supply. If there is an excess level of demand in the economy, this will tend to cause prices to increase. This type of inflation is known as demand-pull inflation and is argued by Keynesians to be one of the major causes of inflation. Demand-pull inflation is essentially "too much money chasing too few goods." 

 


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