Demand-Pull Inflation

What Does Demand-Pull Inflation Mean?
A term used in Keynesian economics to describe the scenario that occurs when price levels rise because of an imbalance in the aggregate supply and demand. When the aggregate demand in an economy strongly outweighs the aggregate supply, prices increase. Economists will often say that demand-pull inflation is a result of too many dollars chasing too few goods.

Investopedia explains Demand-Pull Inflation
This type of inflation is a result of strong consumer demand. When many individuals are trying to purchase the same good, the price will inevitably increase. When this happens across the entire economy for all goods, it is known as demand-pull inflation.

Filed Under: Economics

Related Terms

Aggregate Demand
Aggregate Supply
Cost-Push Inflation
Demand
Employment Act Of 1946
Inflation
Keynesian Economics
Scarcity
Supply
Wage-Price Spiral
More Related Terms

Related Links

Inflation: What Is Inflation? - What is inflation? This section breaks down the differest types of inflation, including stagflation and deflation, and breaks down the causes and costs of inflation.
Cost-Push Inflation Versus Demand-Pull Inflation - Gain a deeper understanding of aggregate supply and demand, forces which raise the price of goods and services.
The Consumer Price Index: A Friend To Investors - As a measure of inflation, this index can help you make key financial decisions.

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