Demand pull inflation, Microeconomics

Assignment Help:

Demand Pull Inflation:

It describes a sustained increase in the general price level that is caused by a permanent increase in nominal aggregate demand. Simply, is can be viewed as an inflation that occurs as a result of increase in aggregate demand.

527_Demand Pull Inflation.png


In Figure, an increase in aggregate demand from AD0 to AD1 given the aggregate supply creates excess demand at P0. This causes price levels to increase from P0 to P1. A new equilibrium is established at point E1 with output at Y1 and at a higher price level of P1. The continuous repetition of this process will lead to a sustained increase in the price level, which characterizes demand-pull inflation.


Related Discussions:- Demand pull inflation

Frictional and cyclical unemployment, Frictional and Cyclical Unemployment:...

Frictional and Cyclical Unemployment: Frictional Unemployment: It refers to unemployment caused by changes in individual labour markets. This is the type of unemploymen

Find the total cost and marginal cost function, Question : (a) Suppose...

Question : (a) Suppose Firm A is a perfectly competitive firm producing good X and faces the following average revenue and average cost Average Revenue: P = 10 Average Co

Evaluate the demand function, Lab Exercise 1. Taco Del Mar has completed a ...

Lab Exercise 1. Taco Del Mar has completed a study of weekly demand for its tacos in Washington State's regional markets.  The study developed the following demand function: Q =

Physical science, What is the formula for heat and how do you solve it?

What is the formula for heat and how do you solve it?

Diminishing marginal returns, law of diminishing marginal returns does no...

law of diminishing marginal returns does not hold then output of the world can be produced in a flower pot. Explain?

Linder theory, According to the Linder theory ,trade will occur in goods th...

According to the Linder theory ,trade will occur in goods that have overlapping demand. With aid of a graph ,illustrate this theory and its implications

Explain the term heteroscedasticity, Question 1: (a) Using examples, ex...

Question 1: (a) Using examples, explain the difference between time-series, cross-sectional, and panel data. (b) Formulate a simple linear equation, and carefully explain

How is the wrong conclusion result in necessary condition, How is the wrong...

How is the wrong conclusion result in necessary condition not in the sufficient condition? This is often heard that the market institution must not be used based onto the fact

Gift giving etiquette, Manners of reaching to someone's place with a presen...

Manners of reaching to someone's place with a present of anything like flowers, chocolates, etc. In U.S., it's not feel good to give flowers to women by men. If a man giving some g

Consumer surplus, suppose ismail were to eat five pizzas per week.what is t...

suppose ismail were to eat five pizzas per week.what is the total value ismail would place on his five weekly pizzas?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd