Demand-pull inflation
What Demand-pull inflation means in Economics B A-Level, as defined for Pearson Edexcel.
Definitions of Demand-pull inflation
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Reference: Pearson Edexcel
Upward pressure on wages and prices that arises as increased aggregate demand pushes the economy towards full capacity.
Occurs when aggregate demand outpaces aggregate supply, often summarised as 'too much money chasing too few goods'.
Inflation caused by an increase in aggregate demand when the economy is operating near full capacity.
Inflation that can be triggered when aggregate demand outpaces aggregate supply as incomes rise.
Inflation caused by an outward shift in aggregate demand, which raises the general price level.
Caused by rapid expansion as the economy operates near full capacity, causing prices to rise.
Topics that use Demand-pull inflation
- Demand-side policies (Pearson Edexcel A-Level)
- Growing economies (Pearson Edexcel A-Level)
- Inflation (Pearson Edexcel A-Level)
- Potential policy conflicts and trade-offs (Pearson Edexcel A-Level)
- The AD/AS model (Pearson Edexcel A-Level)
- The economic cycle (Pearson Edexcel A-Level)
Related terms
- Aggregate demand
- Cost-push inflation
- Investment
- Macroeconomic equilibrium
- Macroeconomic objectives
- Nominal values
- Policy conflicts
- Real values
Using Demand-pull inflation in the exam
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