Which of the following is NOT a cause of inflation?

The choice indicating that demand-pull is not a cause of inflation is indeed misleading. Demand-pull inflation occurs when aggregate demand in an economy outpaces aggregate supply. This situation often arises during periods of economic growth when consumer and business confidence leads to increased spending. When demand increases significantly, it typically raises prices as businesses may struggle to keep up with the heightened demand. Consequently, demand-pull is a recognized and established driver of inflation, specifically reflecting a scenario where excess demand causes prices to rise.

In contrast, the wage-price spiral is an inflationary scenario where wages and prices continuously push against each other. When wages rise, consumers have more spending power, which increases demand for goods and services, leading to higher prices. Excessive monetary growth indicates that too much money is circulating in an economy, devaluing the currency and contributing to inflation as more money chases the same amount of goods.

Therefore, while all other scenarios listed directly contribute to inflation, demand-pull is a significant cause rather than an exception. Understanding the dynamics of how demand influences pricing is crucial in grasping the fundamentals of inflation in economic terms.