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Demand-Pull Inflation Occurs When Aggregate Demand Expands So Much That

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Demand-pull inflation occurs when aggregate demand expands so much that equilibrium output exceeds full employment output.

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Definitions:

Component Costs

The individual costs associated with the different sources of capital a firm utilizes in its capital structure.

Embedded Costs

Embedded costs refer to the expenses that a company has already incurred and cannot be recovered.

External Equity

Refers to funds raised through issuing shares of stock to outside investors, as opposed to internal financing through retained earnings.

Required Rate

The minimum return an investor expects to achieve from an investment, considering its risk level.

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