Which situation would be MOST likely to result in demand-pull inflation?
A) Minimum wage increases.
B) The U.S. Government lowers interest rates.
C) A major military conflict in the Middle East causes an oil shortage.
D) Eastern forests are destroyed by insects and lumber becomes more scarce.

When an economy's aggregate demand exceeds its aggregate supply, demand-pull inflation is said to occur. As the economy advances along the Phillips curve, inflation rises as real gross domestic product grows and unemployment lowers.

Interest rates are being lowered by the US government, which could lead to demand-pull inflation.

So, option B) is correct.

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Which situation would be MOST likely to result in demand-pull inflation? A) Minimum wage increases. B) The U.S. Government lowers interest rates. C) A major military conflict in the Middle East causes an oil shortage. D) Eastern forests are destroyed by insects and lumber becomes more scarce.

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Demand-pull inflation

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Which situation would be MOST likely to result in demand-pull inflation?
A) Minimum wage increases.
B) The U.S. Government lowers interest rates.
C) A major military conflict in the Middle East causes an oil shortage.
D) Eastern forests are destroyed by insects and lumber becomes more scarce.