Demand-Pull: "Too much money chasing too few goods." AD shifts right → price level rises. Economy overheats beyond full employment.
Cost-Push: Input costs rise (oil, wages) → SRAS shifts left → price level rises AND output falls (stagflation). The worst kind.
Phillips Curve: Short-run inverse relationship between inflation and unemployment. Long-run Phillips Curve is vertical at the natural rate.
Tags
InflationPhillips CurveDemand-PullCost-Push
Inflation Scenario
ECONOMIC INDICATORS
Inflation Rate:2.0%
Unemployment:5.0%
Real GDP:$21T
Price Level:100
Demand-Pull: Excessive government spending, tax cuts, or consumer optimism → AD shifts right. The economy temporarily exceeds full employment (low unemployment, high inflation). On the Phillips Curve, we move UP along the short-run curve.