Question

Which of the following would likely cause demand-pull inflation?(1 point)
Responses

a tornado destroys factories and lowers the supply levels throughout the economy
a tornado destroys factories and lowers the supply levels throughout the economy

a world wide recession causes a decline in consumer spending
a world wide recession causes a decline in consumer spending

The purchasing power of consumers increases due to a stimulus check from the US government
The purchasing power of consumers increases due to a stimulus check from the US government

An increase in the price of oil has reduced supply of all goods a services that use oil as an input

Answer 1

The option that would likely cause demand-pull inflation is:

**The purchasing power of consumers increases due to a stimulus check from the US government.**

Demand-pull inflation occurs when demand for goods and services exceeds their supply, often driven by an increase in consumer spending. In this scenario, the issuance of stimulus checks would increase consumers' purchasing power, leading to higher demand, which can result in inflation as suppliers may not be able to keep up with the increased demand.