What causes demand-side inflation? What causes supply-side inflation?
What will be an ideal response?
Ans: Demand-side inflation is caused by an increase in aggregate demand while long-run aggregate supply is constant. Supply-side inflation is caused by a reduction in short-run aggregate supply.
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A pottery craftsman is debating attending the crafters fair. It costs $50 to set up the booth and $20 in transportation to get his pottery to the fair. He nets $5 for each of his pieces, number of pots he must sell to make going to the fair worth the cost?
a. 10 b. 12 c. 14 d. 16
If two commodities are substitutes, then
a. they tend to be used together by consumers b. their prices are generally regulated by the government c. an increase in the price of one of them increases the supply of the other d. the cross-price elasticity of demand is positive e. the cross-price elasticity of demand is negative