Demand Pull Inflation- This type of inflation is caused by increase in demand and when the demand in the economy outgrows the supply in the economy. This kind of inflation can be described by “too much money chasing too few goods”. One of the reasons for demand pull inflation can be the increase in money supply, by way of increased salary, increased government expenditure etc. First statement- expansionary policies whether it is fiscal or monetary. Expansionary fiscal policy is defined as an increase in government expenditures and/or a decrease in taxes. Expansionary monetary policy increases the supply of money in an economy by making credit supply easily