Question: I need to write the essay about AD-AS curve with specific example(choosing one of the countries), but I realized that the data that I collected

I need to write the essay about AD-AS curve with specific example(choosing one of the countries), but I realized that the data that I collected contradict with the content that I learned in Macroeconomic course. As you can see below, inflation rate in 2012 is higher than the one in 2014 even though output gap in 2012 is below than that of 2014. I thought price level should be lower in 2012 due to the lower output gap( since real GDP is below than potential GDP). Can someone please clarify why this happening?

Output gap

2014 : -0.661

2013 : -1.698

2012 : -2.297

Inflation rate

2012 Q1

3.1

2012 Q2

2.5

2012 Q3

2.2

2012 Q4

2.4

2013 Q1

2.5

2013 Q2

2.4

2013 Q3

2.4

2013 Q4

1.9

2014 Q1

1.6

2014 Q2

1.6

2014 Q3

1.5

2014 Q4

1.1

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!