Demand-pull inflation is an increase in prices resulting from an increase in overall demand for a nation's output when consumption, investment, government spending, or net exports increase without a corresponding increase in the level of AS (figure 1. ) Essentially, it is the increase in certain products/services resulting from an increase in demand for the same products/services, which causes the shift of AD to the right. There are various ways that demand-pull inflation can cause. First, demand-pull inflation can occur due to increased consumption. Let's say if the government decides to reduce income taxes, this will increase people's income and give them more purchasing power. And unless it is a period of deflation/recession, people will consume more goods and services, which will shift the AD to the right. As seen in Chart 1, assuming the country is producing at a full employment level, the increase in consumption will move AD2 will move directly to AD3 and cause inflation as there will be increased competition between consumers and the economy benefits. limited power/AS. And due to high competition, the price will increase dramatically, from P2 to P3, but it will cause production to increase only a little, from Y2 to Y3, because since it was already at a full employment level, producers had difficulty to hire more workers. For example, if Korea decided to lower taxes, Koreans would immediately spend their income consuming gold instead of saving it. However, let's say Korea is at full employment level, producers cannot have much higher gold production. Thus, there will be strong competition among Koreans to purchase gold, which will dramatically increase the price of gold but will only increase a limited amount of gold production. Second, demand-pull inflation can be caused by net exports. If the neighboring country suffers from inflation and causes a drastic increase in prices, then the neighboring country will begin to import many goods and services. This would cause the AD to shift to the right because your country is having more export to that country due to high import demand in neighboring countries. This time we assume that the country does not have the full employment level, AD0, which means that it is possible to increase capital and labor. In this case, this shift in AD causes it to approach the near full employment level. Then AD0 would move to AD1.