(a) Demand-Pull Inflation

For the monetarists, a demand-pull inflation is creation of extra purchasing power to the consumer over the same level of production (which happens due to wage revisions at the micro level and deficit financing at the macro level). This is the typical case of creating extra money (either by printing or public borrowing) without equivalent creation in production/supply, i.e., ‘too much money chasing too little output’—the ultimate source of demand-pull inflation.