Explain “cost-push” inflation using aggregate demand–aggregate supply analysis.
What will be an ideal response?
“Cost-push” inflation using the AD–AS analysis could be explained by a leftward shift in the aggregate supply curve. If aggregate supply decreases in this manner, it will intersect the aggregate demand curve at a lower real GDP and a higher price level since the aggregate demand curve is down sloping. This view suggests that prices might rise even if aggregate demand has not increased. The more traditional view has been that inflation is caused by increases in aggregate demand at or near the full-employment level of GDP.
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Known world oil supplies will allow oil to last longer than any other source of energy
Indicate whether the statement is true or false
Demand curves slope downward to the right
a. True b. False Indicate whether the statement is true or false
In which zone will small shifts in AD, either to the right or the left, have relatively little effect on the output level, but instead will have greater effect on the price level?
a. Keynesian b. Neoclassical c. Intermediate d. Equilibrium
Being unemployed in economic terms means that you are:
a. out of work and actively looking for a job. b. out of paid work and not actively looking for a job. c. out of work and not actively looking for a job. d. out of paid work and unable to work.