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Author Question: What does a production point beyond the production possibilities frontier represent? What will be ... (Read 137 times)

piesebel

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on: Jun 29, 2018
What does a production point beyond the production possibilities frontier represent?
 
  What will be an ideal response?

Question 2

Describe how a demand-pull inflation can occur.
 
  What will be an ideal response?


tkempin

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Reply #1 on: Jun 29, 2018
Answer to Question 1

A production point beyond the production possibilities frontier is an unattainable combination of products.

Answer to Question 2

Demand-pull inflation starts from an initial increase in aggregate demand. But if this increase is a one-time only event, the result is a higher price level but not inflation. For inflation to occur, aggregate demand needs to continue to increase. Continuing increases in the quantity of money result in continuing increases in aggregate demand, so monetary growth is necessary for a demand-pull inflation.


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piesebel

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Reply #2 on: Jun 29, 2018
Thank you :)


tkempin

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Reply #3 on: Jun 29, 2018
Happy to help you


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