The increase in the money supply plays an important role in the emergence of demand-pull inflation as well as the consistent inflation. For example, let’s assume that an expansionary fiscal policy has been followed by an increase in government expenditure while money supply is constant. The fact that the money supply remains constant in the face of the increase in government expenditures suggests that the central bank does not accommodate to the expansionary fiscal policy. The increase in government expenditures will cause the aggregate demand curve to shift to the right and the prices will increase.