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G1 - Demand-pull Inflation Model & Interpretation

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G1 - Demand-pull Inflation Model & Interpretation

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G4 - Discuss why Deflation is harmful than Inflation ????

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G4 - Discuss why Deflation is harmful than Inflation ????

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Using 4 Cell MS, you need to do Present your findings with Real World Examples.

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demand-pull inflation occurs when the AD for all goods and services takes over the AS. In this case the AD curve shifts left from AD1 to AD2. If the AD shifts to the right, the quantity of output and price level will rise, but in this case, the AD curve shifts to the left, which means that the equilibrium quantity of output and price level decrease

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1. Higher Price of Commodities.

2. Imported Inflation.

3. Higher Wages.

4. Higher Taxes.

5. Monopoly

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Negative Supply shock shown by Yfe to Y2, which causes a Price Level to increase (high inflation) and the shift to the left by SRAS which causes the Aggregate Demand to be lower.

In this situation unemployment levels are high same as the inflation. Economic Growth is slow while inflation is high, this is known as Stagflation in economics, this however varies on the development of the country (MEDC/LEDC), varying between recession for MEDC's and Stagflation for LEDC's.

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G2 - Cost-push inflation Model & Interpretation

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G2 - Cost-push inflation Model & Interpretation

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G3 - Discuss why Cost-push inflation is harmful than Demand-pull inflation????

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G3 - Discuss why Cost-push inflation is harmful than Demand-pull inflation????

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Using 4 Cell MS, you need to do Present your findings with Real World Examples.

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Due to the increase in either C I G Xn, only the AD shift to the right. When the aggregate demand in an economy strongly outweighs the aggregate supply, price level gos up. As the price level and real output increases, there will be economic growth. Therefore, the upside is economic growth and decrease in inflation in long term. However, the downside is high inflation and high unempolyment in short run