What are some common reasons demand-pull inflation occur?
1 Answer
Dec 4, 2015
Demand pull inflation is caused by demand related factors. It occurs when aggregate demand exceeds aggregate supply.
Explanation:
Causes for Demand Pull Inflation
A Real Factors
1 Increase in consumption of the community and government.
2 Increase in private and government investment.
3 Reduction in tax rates
4 Increased foreign demand for domestic goods.
B Monetary factors
1 Reduction in Bank Rate
2 Open market buying of bonds
3 Reduction in Cash Reserve Ratio.
