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Shifters of Aggregate Demand
AD = C + I + G + (X-M)
Shifters of Aggregate Supply
AS = R + A + P
Stagflation
stagnate economy + inflation
considered recessionary gap
Demand - Pull Inflation (AD Increase)
demands pulls up prices. Consumers want goods and service so they bid up prices.
Cost - Push Inflation (SRAS Decrease
higher production costs increase prices
negative supply shock
negative supply shock
increases the costs of production and forces producers to increase prices
