Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:(i) Using aggregate supply and demand curves illustrate the different effects on output of
demand-pull and cost-push inflation.
(ii) Show using an aggregate supply and demand curve diagram, how an initial increase in
aggregate demand though monetary policy may have no effect on output if workers with
"rational expectations" seek wage rises to compensate for the expected higher price level.
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