What is demand-pull inflation? Draw a diagram illustrating such an inflation. Give an example.
Answer to relevant QuestionsWhat is cost-push inflation? What might cause it? Contrast the expenditure and income approaches to calculating GDP. If Madonna married her personal bodyguard, what effect might it have on national income? Why would a change in asset or money holdings shift the consumption curve? For each of the three income levels shown, pro vide appropriate data to satisfy or be consistent with the absolute and relative income hypotheses.
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