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DEMAND-PULL INFLATION: Demand-pull inflation places responsibility for inflation squarely on the shoulders of increases in aggregate demand. This type of inflation results when the four macroeconomic sectors (household, business, government, and foreign) collectively try to purchase more output that the economy is capable of producing. In general, increasing aggregate demand means buyers want more production than the economy is able to provide. Then end result is that buyers bid up the price of existing production. The extra demand "pulls" the price level higher. You might want to compare demand-pull inflation with cost-push inflation.
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AGGREGATE SUPPLY DECREASE, SHORT-RUN AGGREGATE MARKET A shock to the short-run aggregate market caused by a decrease in aggregate supply, resulting in and illustrated by a leftward shift of the short-run aggregate supply curve. A decrease in aggregate supply in the short-run aggregate market results in an increase in the price level and a decrease in real production. The level of real production resulting from the shock can be greater or less than full-employment real production.
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GRAY SKITTERY
[What's This?]
Today, you are likely to spend a great deal of time watching infomercials trying to buy either a birthday greeting card for your grandfather or a weathervane with a cow on top. Be on the lookout for deranged pelicans.
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A lump of pure gold the size of a matchbox can be flattened into a sheet the size of a tennis court!
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"Genius is an infinite capacity for taking pains. " -- Jane Ellis Hopkins, writer
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AFEA
American Farm Economic Association
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