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ECON 1020 (99)
Lecture 55

ECON 1020 Lecture 55: Lecture 55

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University of Manitoba
ECON 1020
Ryan A.Compton

Oc98 With rising prices, quantity demanded falls leading to less output and more unemployment Costpush inflation effects the aggregate supply curve (moves left of right), which creates a change in quantity demanded (movement along the aggregate demand curve) DemandPull Inflation and Real Output: Demand pull inflation is bad for businesses and the economy because: o 1. Business costs of changing prices o 2. Time and effort spent obtaining information o 3. People limit money that they carry Strong aggregate demand causes a slight increase in output, but a large increase in prices Hyperinflation: Caused by overly expansionary money supply (by governmentcentral bank) Many undermine monetary system and lead to severe declines in output Hyperinflation: a very rapid rise in the general price level Devastating impact on real output and employment, money eventually becomes almost worthless, and ceases to do its job as a medium of exchange The rocketing money supply produces frenzied total spending and severe demandpull inflation
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