Concept:Demand-pull inflation occurs when total demand in an economy grows faster than total supply, pushing prices upward.
Explanation:Option A, an increase in the cost of factor inputs, causes cost-push inflation, not demand-pull.
Option B, an increase in income tax rate, reduces disposable income and reduces aggregate demand.
Option C, an increase in bank lending rates, makes borrowing costlier and reduces spending.
Option D, an increasingly large budget deficit, means the government spends more than it earns.
This extra government spending raises total demand in the economy.
When aggregate demand rises faster than output, general prices rise, causing demand-pull inflation.
Answer:D. increasingly large budget deficit