56 226
Assignments Done
Successfully Done
In January 2018
Your physics homework can be a real challenge, and the due date can be really close — feel free to use our assistance and get the desired result.
Be sure that math assignments completed by our experts will be error-free and done according to your instructions specified in the submitted order form.
Our experts will gladly share their knowledge and help you with programming homework. Keep up with the world’s newest programming trends.

Answer on Macroeconomics Question for dibin

Question #31736
7. Distinguish between ongoing demand pull and ongoing cost push inflation. Carefully draw them. Why might it be difficult to establish the extent to which a given rate of inflation is either demand pull or cost push? (
Expert's answer
Demand pull inflation is where the demand for an item has increased to a point where the price is increased, to reach an new equilibrium on a supply demand diagram. For example, if there is a toy many children want for christmas, sellers may increase the price.

Cost push inflation is where the price must be increased because the costs of making the product or service has increased, for example, if there was a new tax on raw material A, any products which use this raw material will have their price increased relative to the tax increase.

These can both occur at the same time, for example, if we look at the scenario of eg coal. Let's imagine there is a large increase in the demand for coal for whatever reason, the companies buying it from the mines are the customers of the mines, and demand pull inflation occurs, the price these companies sell coal at to the customer must be increased due to this demand pull inflation, inciting cost push inflation.

SO, it appears that it is not a good idea to 'depend' on one of either the monetary or fiscal policy, as it is better to use smaller changes in both to give a larger change in the economy.

If we were aiming to reduce unemployment, we wouldn't depend on a particular policy, we would have to look at supply side policies, the current state of the economy, eg recession, etc. We would do this because there are many factors to take into account before any change which would influence the economy.

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!


No comments. Be first!

Leave a comment

Ask Your question