Macroeconomic Issues and Analysis: An Overview - Inflation
3 important questions on Macroeconomic Issues and Analysis: An Overview - Inflation
Explain demand pull inflation?
This is when AD keeps rising and therefore shifts to the right (outwards). Firms partly rise prices and rise output.
Explain cost push inflation?
Continuing rises in costs and hence continuing leftward (upward) shift in AS. But only when costs of production rise independently from AD.
Explain how expectations and inflation works?
The higher the expectations of inflation, the higher negotiations over wages will be.
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