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A demand-pull inflation spiral results when

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A demand-pull inflation spiral results when

A demand-pull inflation spiral results when
A) aggregate supply decreases, the Federal Reserve corrects the resulting recessionary gap by increasing the quantity of money and the supply shocks then stop.
B) aggregate demand increases, the Federal Reserve does not increase the quantity of money, and so the economy corrects the resulting inflationary gap on its own.
C) aggregate demand increases and the economy corrects the resulting inflationary gap, but aggregate demand continues to increase because the Federal Reserve continues to increase the quantity of money.
D) the economy experiences a one-time jump in the price level.

Textbook

Foundations of Macroeconomics

Edition: 8^th

Authors: Bade, Parkin

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