Types of Inflation
Types of Inflation
Types of Inflation
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1. Demand-pull inflation<br />
• increase in AD causes PL to rise<br />
• Includes the Quantity Theory <strong>of</strong> money<br />
• Too much money in circulation creates more demand<br />
for the same number <strong>of</strong> products<br />
Price<br />
Level<br />
AD1<br />
AD2<br />
AS<br />
AD ↑<br />
PL2<br />
PL1<br />
PL ↑ (inflation)<br />
GDP ↑ (unemp ↓)<br />
GDP1<br />
GDP2<br />
Real GDP
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