WAEC Economics 2018 Objective — Question 33
Question 33 of 50 from the West African Examinations Council (WAEC) Economics 2018 Objective paper, with the correct answer and a full explanation.
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Demand-pull inflation is likely to be caused by
- A. an increase in the cost of factor inputs
- B. an increase in the income tax rate
- C. increase in bank lending rates
- D. increasingly large budget deficitCorrect
Explanation
A large budget deficit increases the money supply/aggregate demand in the economy, which can pull prices up, causing demand-pull inflation.
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