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Author Question: How are demand-pull and cost-push inflation reflected in terms of the AD-AS ... (Read 68 times)

jenna1

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on: Jun 30, 2018
How are demand-pull and cost-push inflation reflected in terms of the AD-AS model?

Question 2

When the Fed decreases the money supply, interest rates:
 a. rise.
  b. fall.
  c. are unaffected.
  d. rise and then fall.
  e. fall and then rise.


Silverbeard98

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Reply #1 on: Jun 30, 2018
Answer to Question 1

Demand-pull inflation is reflected as a rightward shift of the AD curve that expands real GDP but also increases the price level. Cost-push inflation is reflected as a leftward shift of the AS curve which drives the price level up.

Answer to Question 2

a


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