Economics Today: The Macro View (19th Edition) (Pearson Series in Economics)
Economics Today: The Macro View (19th Edition) (Pearson Series in Economics)
19th Edition
ISBN: 9780134478760
Author: Roger LeRoy Miller
Publisher: PEARSON
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Chapter 11, Problem 18P
To determine

What happens to short-run equilibrium price level when the government imposes short-term barriers to international trade and substantial regulations of domestic businesses

Concept introduction:

Aggregate Supply (AS): AS is the total dollar value of goods and services produced in an economy during a given period of time and price level.

Aggregate Demand (AD): AD is the total dollar value of goods and services demanded in an economy during a given period of time and price level.

Demand-Pull Inflation: Demand-pull inflation is the inflation caused when AD exceeds AS due to an increase in AD.

Cost-Push Inflation: Cost-push inflation is the inflation caused when AS falls short of AD due to a decrease in AS resulting from rising costs of production.

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