More Irritating Details About Inflation

The Phillips Curve & Accelerating Inflation -We know what the Phillips curve is. I'm not explaining it again.-At Y* and U*, there is no gap inflation-When the economy is in an inflationary gap, the BoC must validate for wage inflation-In the 1960s,...

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Demand Shocks and Accelerating Inflation

INFLATIONARY DEMAND SHOCKS AND INFLATION-An increase in consumption, investment, government expenditures, and net exports causes an increase in aggregate expenditure, a rightward shift in aggregate demand, and an increase in the equilibrium price level. IF...

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Inflation and Supply Shocks

FROM WAGE CHANGES TO PRICE CHANGES -If a change in money wages is positive (wages increase), short run aggregate supply will decrease (it shifts to the left due to increased costs). This causes prices to rise, and the overall effect is inflationary-If...

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