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Which of the following is Demand-Pull Inflation:
- a)According to Keynesian it is that the demand increases over the same level of supply, or the supply decreases with the same level of demand.
- b)According to monetarists, it is the creation of extra purchasing power to the consumer over the same level of production.
- c)Neither of them
- d)Both of them
Correct answer is option 'D'. Can you explain this answer?
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Verified Answer
Which of the following is Demand-Pull Inflation:a)According to Keynesi...
A mismatch between demand and supply pulls up prices.
Either the demand increases over the same level of supply, or the supply decreases with the same level of demand and thus the situation of demand-pull inflation arises.
This was a Keynesian idea. The Keynesian School suggests cuts in spending as the way of tackling excess demand mainly by increasing taxes and reducing government expenditure.
Monetarists view Demand-pull inflation as the creation of extra purchasing power to the consumer over the same level of production.
This is the type of creating extra money (either by the printing or public borrowing) without equivalent creation in production/supply i.e. too much money chasing too little output.
Most Upvoted Answer
Which of the following is Demand-Pull Inflation:a)According to Keynesi...
Demand-Pull Inflation
Definition:
Demand-pull inflation refers to a situation where the demand for goods and services in an economy rises, leading to an increase in the overall price level.
Keynesian View:
According to Keynesian economics, demand-pull inflation occurs when there is an increase in aggregate demand in the economy, which exceeds the increase in aggregate supply. This situation occurs when there is an increase in consumer spending, investment, or government expenditure, leading to an increase in demand for goods and services. As a result, prices rise, and inflation occurs.
Monetarist View:
According to monetarists, demand-pull inflation occurs when there is an increase in the money supply, which leads to an increase in consumer spending. As consumers have more money to spend, they increase their demand for goods and services, leading to an increase in prices. This type of inflation is also known as "too much money chasing too few goods."
Both Views:
Both Keynesian and monetarist economists agree that demand-pull inflation is the result of an increase in demand for goods and services in the economy. The difference lies in the cause of the increase in demand. Keynesians believe that it is due to an increase in consumer spending, investment, or government expenditure, while monetarists believe that it is due to an increase in the money supply.
Conclusion:
In conclusion, demand-pull inflation is a situation where the demand for goods and services in an economy rises, leading to an increase in the overall price level. Both Keynesian and monetarist economists agree that this type of inflation is the result of an increase in demand. The difference lies in the cause of the increase in demand.
Definition:
Demand-pull inflation refers to a situation where the demand for goods and services in an economy rises, leading to an increase in the overall price level.
Keynesian View:
According to Keynesian economics, demand-pull inflation occurs when there is an increase in aggregate demand in the economy, which exceeds the increase in aggregate supply. This situation occurs when there is an increase in consumer spending, investment, or government expenditure, leading to an increase in demand for goods and services. As a result, prices rise, and inflation occurs.
Monetarist View:
According to monetarists, demand-pull inflation occurs when there is an increase in the money supply, which leads to an increase in consumer spending. As consumers have more money to spend, they increase their demand for goods and services, leading to an increase in prices. This type of inflation is also known as "too much money chasing too few goods."
Both Views:
Both Keynesian and monetarist economists agree that demand-pull inflation is the result of an increase in demand for goods and services in the economy. The difference lies in the cause of the increase in demand. Keynesians believe that it is due to an increase in consumer spending, investment, or government expenditure, while monetarists believe that it is due to an increase in the money supply.
Conclusion:
In conclusion, demand-pull inflation is a situation where the demand for goods and services in an economy rises, leading to an increase in the overall price level. Both Keynesian and monetarist economists agree that this type of inflation is the result of an increase in demand. The difference lies in the cause of the increase in demand.
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Which of the following is Demand-Pull Inflation:a)According to Keynesianit is that the demand increases over the same level of supply, or the supply decreases with the same level of demand.b)According to monetarists, it is the creation of extra purchasing power to the consumer over the same level of production.c)Neither of themd)Both of themCorrect answer is option 'D'. Can you explain this answer?
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Which of the following is Demand-Pull Inflation:a)According to Keynesianit is that the demand increases over the same level of supply, or the supply decreases with the same level of demand.b)According to monetarists, it is the creation of extra purchasing power to the consumer over the same level of production.c)Neither of themd)Both of themCorrect answer is option 'D'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Which of the following is Demand-Pull Inflation:a)According to Keynesianit is that the demand increases over the same level of supply, or the supply decreases with the same level of demand.b)According to monetarists, it is the creation of extra purchasing power to the consumer over the same level of production.c)Neither of themd)Both of themCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following is Demand-Pull Inflation:a)According to Keynesianit is that the demand increases over the same level of supply, or the supply decreases with the same level of demand.b)According to monetarists, it is the creation of extra purchasing power to the consumer over the same level of production.c)Neither of themd)Both of themCorrect answer is option 'D'. Can you explain this answer?.
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