This blog has been created to provide an area for economics students to read about how economics impacts daily life. It is especially useful for students to understand the application of macroeconomics as communicated through the media and governmental websites.

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Brief description: Demand pull inflation is inflation caused by excess aggregate demand in the economy.

Detailed description: On the diagram the increase in demand from AD1 to AD2 has caused the price level to rise. If this continues then demand-pull inflation is the result. The rise in demand may have come from a variety of different sources; a decrease in the tax level, an increase in government expenditure or perhaps an increase in consumer expenditure.