Download Inflation and Short-run Phillips Curve 1 2 Demand-pull inflation

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Inflation and Short-run Phillips Curve
1
Demand-pull inflation
Example: G (Government spending) rises.
11
Model of Aggregate Demand
12
(AD) and Aggregate Supply (AS)
Phillips Curve
Inflation Rate (%)
Price Level
AS
Phillips
Curve
AD 2
AD 1
Quantity of Output
2
Unemployment Rate (%)
Cost-push inflation
Example: Energy crisis
Model of Aggregate Demand
12
(AD) and Aggregate Supply (AS)
Price Level
AS 2
AS 1
AD
Instability (shift) of the Phillips
Curve
Inflation Rate (%)
21
Phillips
Curves
= Stagflation
Curve 2
Curve 1
Quantity of Output
INFPHILL.DOC
Unemployment Rate (%)
28th July 2010
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