Explain cost-push inflation verbally and graphically, using aggregate demand and aggregate supply analysis.?

Question

Assess the impact on the price level, real GDP, and employment.

Answer 1

Cost push Inflation increases price level, real GDP unchanged, and employment should decrease.

Answer 2

inventory prices may have had 2 consequences. First, there is the wealth result. expanding inventory prices made stockholders richer, which led to them to spend more suitable by truth they journey more suitable prosperous. in words of blend call for and blend grant, this represents a rightwards shift interior the mixture call for curve. this may have helped keep up complete-employment orpersistent unemployment to its complete-employment fee. Secondly, expanding inventory prices could boost funding. even as corporations see their inventory prices pass up, they detect that they are able to get more suitable funding funds for each percentage they project, meaning any kit or capital they favor to take a position in will develop into more suitable fee-efficient as suitable. expanding inventory prices may have more suitable suitable inner optimal funding, which could have shifted the mixture call for curve to the acceptable and maintained complete employment.