Answers EDGE 2025-2026 EconomicsCareer Preparedness B Test — TestQuestion 24

24

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Question 24 • EDGE 2025-2026 Economics/Career Preparedness B

Which scenario is an example of demand-pull inflation?

Answer

A

Consumers have more money to buy cars, and the prices of cars and car accessories rise as a result.

B

An increase in workers’ wages raises the production cost of cars, and car prices rise as a result.

C

The demand for cars falls as consumers have less disposable income, and car prices fall as a result.

D

A government bailout helps car manufacturers lower their costs, and car prices fall as a result.

Explanation

Demand-pull inflation happens when rising demand for goods pushes prices upward. In choice A, consumers have more money to spend, so demand for cars and accessories increases and their prices rise. Choice B describes cost-push inflation because higher wages raise production costs.

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