Economics (MindTap Course List)
Solutions
Economics (MindTap Course List)
Explain how demand-induced, one-shot inflation may seem like supply-induced, one-shot inflation.
One-shot inflation.
From the demand side, let us assume that when the money supply increases, it leads to an increase in the aggregate demand and result in an increase in the price level, while the price level remains unchanged in the short-run. The higher prices of goods and services induce the labors to demand for a higher wage. This results in a reduction in the supply of goods as the cost of production increases...
Chapter 14 Solutions
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