Question

Use the drop-down menus to complete the statements.


When people have more money and eagerly spend it, this increases
.
This leads to
inflation.
When the prices of raw materials or labor increase, this causes an increase in
, resulting in
for consumers.

Answer 1

When people have more money and eagerly spend it, this increases aggregate demand.
This leads to demand-pull inflation.
When the prices of raw materials or labor increase, this causes an increase in production costs, resulting in higher prices for consumers.