Demand pull inflation, Microeconomics

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.

Posted Date: 1/3/2013 12:23:55 AM | Location : United States







Related Discussions:- Demand pull inflation, Assignment Help, Ask Question on Demand pull inflation, Get Answer, Expert's Help, Demand pull inflation Discussions

Write discussion on Demand pull inflation
Your posts are moderated
Related Questions
a machine cost 18871.00 today. at the end of each year I own the machine & it gives me returns of 4,948.00 after paying repairs and maintenance. After 6 years, I expect to sell it

how to find pareto efficient output using algebra

why does gap between the ATC curve and the AVC curve decreases as the level of output increases


The market demand function of a firm is given by 4P + Q - 16 = 0 And the AC function takes the form AC = 4/Q + 2 - 0.3Q + 0.05Q 2 Find the Q which gives: (a)  Maxim

using necessary and sufficient condition explain consumer surplus diagrammically and mathematically?

Question 1: (a) Describe what is Economic growth and describe its relationship with standard of living? (b) Assuming you are the government economist, what policy measures

The demand curve for gasoline is P = 200 - 10Q.   a. Find the elasticity of demand for a quantity of 8.  Does this number imply that quantity demanded is sensitive to price chan

Suppose the demand curve for a consumer for coffee is: Q = 6 - 2P, where Q represents the number of cups per day and P is the price of coffee per cup.  1.  Suppose the con

Productivity:Generally, productivity measures efficiency or effectiveness of productive effort. Productivity can be measured in several different ways. Physical productivity measur