Final answer:
Excessive government spending can indeed cause demand-pull inflation, which is a condition where too much money is pursuing too few available goods, leading to rising prices.
Step-by-step explanation:
The statement 'Excessive government spending can cause demand-pull inflation' is true. Demand-pull inflation occurs when there is an increase in aggregate demand, categorized by the economic phrase, 'too many dollars chasing too few goods'. Notably, this type of inflation was evident during periods post-wartime, where government spending was significantly high, and consumer goods were scarce, as most production was directed towards the war effort. Once the war ended, production normalized, and along with the lifting of wartime price controls, there was a substantial release of accumulated buying power that drove up prices, causing inflation. Conversely, an excessive amount of goods or a reduction in spending can lead to deflation or a decrease in inflation, as seen during major recessions or the Great Depression.