With reference to Indian economy, demand-pull inflation can be caused/ increased by which of the following? 1. Expansionary policies 2. Fiscal stimulus 3. Inflation-indexing wages 4. Higher purchasing power 5. Rising interest rates Select the correct answer using the code given below.

1. Demand-pull inflation occurs when aggregate demand in an economy outpaces aggregate supply, leading to an increase in the general price level. 2. Statement 1: Expansionary policies (like expansionary monetary policy involving lower interest rates or increased money supply, or expansionary fiscal policy) aim to boost aggregate demand, which can cause or increase demand-pull inflation. Correct. 3. Statement 2: Fiscal stimulus, such as increased government spending or tax cuts, directly increases aggregate demand, contributing to demand-pull inflation. Correct. 4. Statement 3: Inflation-indexing wages means wages automatically rise with inflation. While this sustains purchasing power and can contribute to ongoing inflation (wage-price spiral), it is often considered more of a cost-push factor or a mechanism that perpetuates inflation rather than a primary cause of demand-pull inflation itself, which originates from excess demand. 5. Statement 4: Higher purchasing power means consumers have more money to spend on goods and services, directly increasing aggregate demand and thus contributing to demand-pull inflation. Correct. 6. Statement 5: Rising interest rates make borrowing more expensive for consumers and businesses, which tends to reduce consumption and investment spending, thereby dampening aggregate demand. This typically counters inflation, rather than causing or increasing it. Incorrect. Therefore, Expansionary policies, Fiscal stimulus, and Higher purchasing power (1, 2, and 4) are the factors listed that directly cause or increase demand-pull inflation.