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Which of the following are short-run effects of demand-pull inflation?

Multiple select question.

An unaffected real output

A rise in real output

A rise in the price level

An unaffected price level

1 answer

In the context of demand-pull inflation, the following options can be considered short-run effects:

  1. A rise in real output - In the short run, increased demand can lead to higher production levels, resulting in an increase in real output.

  2. A rise in the price level - Demand-pull inflation specifically indicates that an increase in overall demand leads to higher prices, thus resulting in a rise in the price level.

The other options (an unaffected real output and an unaffected price level) are not typical short-run effects of demand-pull inflation, as demand-pull inflation generally causes both an increase in real output and an increase in the price level.