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Which of the following is an example of demand-pull inflation?

medium Q4 of 15
Economic Awareness - Sectors of Indian Economy
Which of the following is an example of demand-pull inflation?
AHigher wages demanded by labour unions
BIncrease in crude oil prices raising production costs
CA surge in consumer spending due to tax cuts
DDisruption in supply chain causing raw material shortages
Step-by-Step Solution

  1. Step 1: Understand demand-pull inflation examples

    Demand-pull inflation arises from increased aggregate demand pushing prices up.

  2. Step 2: Analyze options

    Tax cuts increase disposable income, boosting consumer spending and aggregate demand. The other options relate to cost-push inflation due to rising costs or supply disruptions.

  3. Final Answer:

    A surge in consumer spending due to tax cuts → Option C

  4. Quick Check:

    Demand-pull inflation = increase in aggregate demand ✅
Quick Trick: Tax cuts often trigger demand-pull inflation.
Common Mistakes:
  • Mistaking cost-push causes as demand-pull inflation.
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