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True or False: Demand-pull inflation exists when an economy experiences inflation and high unemployment simultaneously. True

Demand-pull inflation results in ▼ price level, real GDP and ▼ employment.

True or False: Demand-pull inflation exists when an economy experiences inflation and high unemployment simultaneously. True False Adjust the following graph to show demand-pull inflation. Aggregate Demand Aggregate Supply Aggregate Supply Aggregate Demand REAL GDP
Demand-pull inflation results in ▼ price level, real GDP and ▼ employment.
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Answer #1

(1) False

High unemployment and high inflation are characteristics of cost-push inflation, which is caused by leftward shift of AS curve which raises price level but lowers real GDP.

(2) Demand pull inflation is represented by a rightward shift in AD curve, which increases both price level and real GDP.

Aggregate Demand Aggregate Supply Aggregate Supply Aggr pate Demand REAL GDP

(3) Demand pull inflation leads to higher price level, higher real GDP and lower unemployment.

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