demand-pull inflation

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Definition
  1. Noun:
    • Inflation caused by an increase in demand or in the supply of money: A sustained increase in the general price level that occurs when aggregate demand for goods and services in an economy outpaces aggregate supply. It is often described as "too much money chasing too few goods."
Usage and Examples
  • Noun:
    • The rapid economic recovery led to demand-pull inflation as consumers spent heavily.
    • Central banks monitor the money supply to prevent demand-pull inflation from accelerating.
    • Economists argued that the price rises were a classic case of demand-pull inflation, not cost pressures.
Advanced Usage
  • "to trigger demand-pull inflation": to cause this type of inflation to begin.
    • A sudden tax cut could trigger demand-pull inflation if productive capacity is limited.
  • "demand-pull inflationary pressures": forces in the economy that are pushing prices up due to high demand.
    • The government's stimulus package created significant demand-pull inflationary pressures.
Variants and Related Words
  • Cost-push inflation (n): Inflation caused by an increase in the costs of production (e.g., wages, raw materials), which forces prices up.
    • The oil price shock resulted in cost-push inflation.
  • Inflationary gap (n): The difference between the actual level of aggregate demand and the level of demand required to achieve full employment without inflation; a positive gap can lead to demand-pull inflation.
  • Aggregate demand (n): The total demand for final goods and services in an economy at a given time.
Synonyms
  • Demand inflation: A less common but direct synonym.
  • Excess-demand inflation: Emphasizes the core condition of demand exceeding supply.
Related Concepts and Phrases
  • Overheating economy: An economy growing at an unsustainable pace, often leading to demand-pull inflation.
    • The central bank raised interest rates to cool the overheating economy.
  • Demand-side pressures: Economic forces originating from the demand side of the market that can cause inflation.
Noun
  1. inflation caused by an increase in demand or in the supply of money