Demand-pull inflation occurs when aggregate demand outstrips aggregate supply. Expansionary policies, such as increased government spending or tax cuts (fiscal stimulus), inject money into the economy, boosting aggregate demand. Similarly, higher purchasing power directly translates to increased demand for goods and services. Inflation-indexing wages can contribute to wage-price spirals but are not a primary cause of demand-pull inflation itself; they tend to follow or sustain inflation. Rising interest rates are typically a tool to curb inflation by reducing demand, not causing it.