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Page 1: Demand Pull Inflation

Demand Pull Inflation

• Description of initial Aggregate Demand and Aggregate Supply curves

Page 2: Demand Pull Inflation

The Price Level

0

Aggregate Output

AS

AD1

P1

Q1

Initial Equilibrium

Page 3: Demand Pull Inflation

The Price Level

0

Aggregate Output

AS

AD1

P1

Y1

AD2

Y1

P2

AD → small P and large Y

Page 4: Demand Pull Inflation

The Price Level

0

Aggregate Output

AS

AD1

P1

Y1

AD2

Y2

P2

AD3

Y3

P3

AD → large P and small Y

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