What are sources that can start a demand-pull inflation?
What will be an ideal response?
Demand-pull inflation starts with an increase in aggregate demand. This increase can arise by increases in the quantity of money, increases in government expenditure, or increases in net exports because any of these three shift increase aggregate demand and shift the AD curve rightward. The increase in aggregate demand leads to a higher price level and, temporarily, a higher level of real GDP. If the economy began at full employment, then temporarily the level of real GDP will be above potential. In the long run, however, the money wage rate rises to offset the increase in the price level, so aggregate supply decreases and the AS curve shifts leftward. The decrease in aggregate supply also raises the price level. So the only way the inflation can continue is if aggregate demand continues to increase.
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Which of the following nations has experienced the highest average annual rate of growth of per capita real GDP since 1990?
A) Germany B) United States C) India D) China
Davis and Huttenback (1982) find evidence to support the claim that the colonists were overtaxed by England
Indicate whether the statement is true or false
Less than 200,000 poor families would no longer be counted as poor if each family had the same income and one person less
Indicate whether the statement is true or false
When analyzing the impact of a budget deficit, an economist will focus on
A. strictly the ratio of the deficit to GDP (it doesn't matter what is purchased with the borrowed money). B. strictly the amount borrowed. C. strictly the inflation-adjusted amount borrowed. D. the ratio of the deficit to GDP and whether what is purchased with the borrowed money can be considered an investment.