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3 Cards in this Set
- Front
- Back
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Demand pull inflation |
This is inflation as a result of demand side factors or cause shifts in AD Increases in AD will be inflationary Negative output gap |
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Cost pull inflation |
This is inflation as a result of changes in prices Raw materials, wages, tight labour market Can also effect supply pull inflation and powerful unions Taxes hold inflationary pressures on all goods |
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Output gap... |
Positive output gaps will have a TIGHT LABOUR MARKET leading to an increase in AD, people will be then UNEMPLOYED through STRUCTURAL UNEMPLOYMENT. Therefore a LOW LEVEL OF BENEFITS and cause FRICTIONAL UNEMPLOYMENT. Negative output gaps will have people discouraged from employment- both STRUCTURAL and FRICTIONAL UNEMPLOYMENT |
