Demand-pull inflation is likely to be caused by

  • A an increase in the cost of factor inputs
  • B increase in the income tax rate
  • C increase in bank lending rate
  • D increasingly large budget deficit
jamb 2022english-language

The correct answer is D. increasingly large budget deficit

Demand-pull inflation occurs when there is excess demand of goods over supply. Excessive demand is a consequence whereby consumers have money purchasing power to buy goods and services.

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