Asked by Brianna Weidaman on May 19, 2024
Verified
The inflation experienced in the United States during the late 1960s as a result of the spending on the Vietnam War is an example of:
A) hyperinflation.
B) demand-pull inflation.
C) disinflation.
D) cost-push inflation.
E) cyclical inflation.
Vietnam War
A prolonged conflict from 1955 to 1975 between North Vietnam, supported by its communist allies, and South Vietnam, supported by the United States and other anti-communist countries.
Demand-Pull Inflation
Inflation that occurs when the demand for goods and services exceeds the available supply, leading to higher prices.
- Acknowledge the reasons behind inflation, focusing on cost-push and demand-pull mechanisms.
- Secure an understanding of historical patterns in inflation and what has influenced these trends.
Verified Answer
SS
Syazwani SahidiMay 19, 2024
Final Answer :
B
Explanation :
Demand-pull inflation occurs when there is an increase in demand for goods and services that outpaces the supply. In the case of the Vietnam War spending, the government was increasing demand through its spending but the supply of goods and services was not increasing at the same rate, leading to inflation. This is different from cost-push inflation which occurs when the increase in prices is due to an increase in production costs rather than demand.
Learning Objectives
- Acknowledge the reasons behind inflation, focusing on cost-push and demand-pull mechanisms.
- Secure an understanding of historical patterns in inflation and what has influenced these trends.
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