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7. The sources of inflation During World War I and World War II, the U.S. government spent large sums of money on the war effShift one of the curves on the graph to illustrate the primary cause of the inflation described in the preceding paragraph. NThis kind of inflation is called inflation. Inflation of this type is accompanied by in aggregate output.

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This kind of inflation is called "demand pull inflation" and inflation this type is accompanied "increase in th the aggregate output".

An increase in the government expenditure will shift the aggregate demand curve to then right and the new equilibrium will be

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