Which theory of inflation states that all sectors in the economy try to buy more than the economy can produce, which in turn creates shortages and lost business for merchants.
a.
demand-pull theory
c.
wage-price spiral
b.
cost-push theory
d.
economic growth theory

demand-pull theory

Explanation:

The demand-pull theory explains that in a situation where the purchase of products, that is, the demand for products in exorbitant quantities that exceed the capacity of these products to be produced, causes inflation. In other words, according to this theory, if all sectors of the economy try to buy more than the economy can produce, which in turn would create scarcity and loss of business for traders, it would cause an imbalance in the region's economy and in turn would cause inflation.

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