Final answer:
Demand-pull inflation is caused by higher demand from a fiscal stimulus, where increased demand outpaces supply, leading to higher prices.
Step-by-step explanation:
The scenario that is a cause of demand-pull inflation is A) Higher demand from a fiscal stimulus. Demand-pull inflation occurs when aggregate demand in an economy outpaces aggregate supply. It can result from any cause that increases the overall demand for goods and services when firms cannot meet this higher demand with additional supply.
An example of this could be a government fiscal policy that cuts taxes or increases government spending, leading to higher demand from consumers and businesses, which in turn leads to increased prices as demand outstrips supply.
Demand-pull inflation occurs when there is an increase in demand for goods and services, causing prices to rise. From the given options, the scenario that is a cause of demand-pull inflation is A) Higher demand from a fiscal stimulus.
When the government implements a fiscal stimulus, such as increasing government spending or cutting taxes, it stimulates consumer spending and leads to higher demand for goods and services. As a result, businesses may respond by increasing prices, leading to demand-pull inflation.