What is demand pull inflation?

Inflation is a sustained increase in the average price level in a given time period.
Demand pull inflation refers to the economic scenario in which there is an increase in aggregate demand. This increase can be potentially caused the government's manipulation of taxes and government expenditure or the central bank's control of interest rates and the money supply.
This can be depicted on a diagram by a rightward shift in an aggregate demand (AD) curve. The increase in AD results in a subsequent increase in the economy's real output and average price level. The increase in average price level is known as the inflation.

DR
Answered by Demi R. Economics tutor

4120 Views

See similar Economics GCSE tutors

Related Economics GCSE answers

All answers ▸

Explain why average costs of a business may fall as it experiences growth.


Following Teresa May's Brexit speech, the UK exchange rate in terms of euros depreciated from 1.13 to 1.08. If a firm sells 20000 units at 4 euros per unit, what is the difference in the firms revenue following the change in the exchange rate?


Explain price elasticity of demand


How can changes to taxes cause a reduction in the public deficit?


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2026 by IXL Learning