ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Inflation is a general rise in the price of goods in an economy. Demand-pull inflation causes upward pressure on prices due to shortages in supply, a condition that economists describe as “too many dollars chasing too few goods.” An increase in aggregate demand can also lead to this type of inflation.

Detailed explanation-2: -Demand-pull inflation is when there is an increase in aggregate demand, and the supply remains the same or decreases. When supply cannot meet growing demand, prices for goods and services are pulled higher.

Detailed explanation-3: -One of the best examples of how demand-pull inflation ties directly to an increase in aggregate demand comes from the 2008 financial crisis and subprime mortgages. As mortgage-backed securities gained popularity in the years leading up the crisis, demand for these securities also increased.

Detailed explanation-4: -The correct option is A. Coulbourn. Coulbourn defined inflation as too much money chasing too few goo.

Detailed explanation-5: -Economists say inflation occurs when “too much money is chasing too few goods.” This is likely to occur when the money supply increases at a faster rate than the supply of goods and services produced in the economy.