Demand-pull inflation

a. can be present even during an economic depression.

b. occurs when total spending in the economy is excessive.

c. is measured differently than cost-push inflation.

d. is also called "hyperinflation."

Answer: The correct answer is b. occurs when total spending in the economy is excessive.

Explanation: Demand-pull inflation is commonly referred to as excess demand inflation and is the most common and traditional type of inflation. It occurs when aggregate demand is increasing and the available supply is decreasing. In this case, goods may be in short supply due to fully utilised resources, inefficient production methods, or production cannot be increased rapidly to meet the increasing aggregate demand. As a result of these factors, prices would begin to rise in response to a situation commonly described as "too much money chasing too few goods."

There are two principals of demand-pull inflation - the moneratist and the Keynesians. While the former believe that the role of money is the major cause of demand-pull inflation, the latter believe that increase in aggregate demand causes demand-pull inflation.