How does demand-pull inflation differ from cost-push inflation?

A. Demand-pull inflation is driven by consumers, while cost-push inflation is driven by producers.
B. Demand-pull inflation is driven by producers, while cost-push inflation is driven by consumers.
C. Demand-pull inflation is driven by the private sector, while cost-push inflation is driven by the government.
D. Demand-pull inflation is driven by the government, while cost-push inflation is driven by the private sector.

Demand-pull inflation occurs when consumer demand outstrips supply, leading to higher prices, while cost-push inflation arises when production costs increase, causing producers to raise prices. Each type has distinct causes and impacts on the economy. Understanding the differences is crucial for economic analysis. ;

Answered by GinnyAnswer | 2025-07-06

Demand-pull inflation occurs when consumer demand exceeds supply, often leading to higher prices due to increased spending. In contrast, cost-push inflation is caused by rising production costs leading producers to increase prices. Therefore, the correct answer to the question is A: Demand-pull inflation is driven by consumers, while cost-push inflation is driven by producers.
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Answered by Anonymous | 2025-07-08