Someone help with some examples. Demand Pull - Unemployment below normal rate leading to upward pressure on wages. Increasing wages shift short run AS (decrease) resulting in a new higher price. Cost Push - Unexpected increase in the real price of inputs (oil/wages). AS shifts up and left which results in below full employment GDP and at a higher price level. 1970s. Still I’m having some trouble discovering the differences.
To understand the differences look at the graphs… Demand pull is an increase in AD… cost push decrease in AS
AD = C + I + G + NX demand pull inflation occurs when the AD curve shifts to the right…the shift could be due to increase in consumption level, or investment of government exp or net exports… cost push you got it right…the AS shifts to the left…
yeah… it’s easy to understand when you read through the text but it’s the problem of remembering the damn material… trying to keep it up…