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Demand Pull Inflation. Description of initial Aggregate Demand and Aggregate Supply curves. AS. The Price Level. Initial Equilibrium. AD 1. P 1. 0. Q 1. Aggregate Output. AS. The Price Level. AD → small P and large Y. AD 2. AD 1. P 2. P 1. 0. Y 1. Y 1. Aggregate Output. - PowerPoint PPT Presentation
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Demand Pull Inflation
• Description of initial Aggregate Demand and Aggregate Supply curves
The Price Level
0
Aggregate Output
AS
AD1
P1
Q1
Initial Equilibrium
The Price Level
0
Aggregate Output
AS
AD1
P1
Y1
AD2
Y1
P2
AD → small P and large Y
The Price Level
0
Aggregate Output
AS
AD1
P1
Y1
AD2
Y2
P2
AD3
Y3
P3
AD → large P and small Y