Question

How can demand-pull inflation lead to cost-push inflation?

Short answer

Demand-push inflation raises the prices of goods and services sold in the market and raises inflation rates.

Step-by-step solution

Step 1. Introduction

Inflation is defined as a steady increase in the prices of goods and services within an economy over time.

Step 2. Explanation

Demand-push inflation raises the prices of goods and services sold in the market and raises inflation rates, causing workers to demand higher pay in the hope of future increases in the prices of goods and services. Cost-pull inflation would result as a result of this.