ECON 1010 Study Guide - Aggregate Demand, Aggregate Supply, Potential Output
29 Mar 2014
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Chapter 28 canadian inflation , unemployment and business cycle. Inflation (an ongoing process of rising in price level) Can occurs when money grows faster than potential gdp employment) Two major sources of inflation (i) demand-pull inflation (ii) cost-push inflation (potential gdp is when labour is fully employed; and the quantity of real gdp is at full. Demand-pull inflation=occurs when inflation occurs when aggregate demand rises more rapidly than the economy"s productive potential. Aggregate demand (ad) is the total demand for goods and services economy over a period produced in of time. Examples; cut in interest rate, increase in the quantity of money, increase in investments. Sources of increases of aggregate demand (i) increase in the quantity of money (shifts the graph rightward and out) (ii)increase in the government expenditure (iii)increase in exports (iv) increase in investment. -increase in the quantity of money (shifts the graph rightward and out) Real gdp > potential gdp | unemployment rate < natural rate.
