Economics · Economy
If the Monetary Policy Committee (MPC) concludes that inflation is primarily demand-pull, which of the following is the most likely underlying cause?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Wage negotiations resulting in an across-the-board increase in industrial labor costs.
- 2A widespread crop failure leading to a sharp spike in the price of food staples.
- 3Massive increase in government spending (fiscal stimulus) without a corresponding increase in aggregate supply.✓
- 4A sudden, large increase in global crude oil prices.
Correct answer
Massive increase in government spending (fiscal stimulus) without a corresponding increase in aggregate supply.
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