Page 185 - DECO201_MACRO_ECONOMICS_ENGLISH

Macro Economics

Notes 6. “Demand pull inflation occurs only when there is an inflationary gap in the economy.”
Explain.
7. State the demand side factors that lead to an inflationary gap.

8. Describe the concept of ‘supply shock’ inflation. Why is it called supply shock?
9. Compare and contrast demand pull and cost push inflation.
10. Some economists argue that there cannot be such a thing as a cost push inflation. Do you
agree with them? Justify your answer.
Answers: Self Assessment

1. (c) 2. (d)
3. (a) 4. (b)
5. (d) 6. False
7. True 8. True

9. aggregate demand, aggregate supply 10. Inflationary gap
11. Demand pull 12. Disposable income
13. Supply shock 14. Wage push

15. J M Keynes
10.7 Further Readings

Books Chris Mulhearn, Howard. R. Vane and James Eden, Economics for Business, Palgrave
Foundation, 2008
Dr. Atmanand, Managerial Economics, Excel Books, Delhi.

Lipsey & Chrystal, Economics- Indian Edition, Oxford University Press., 2007

Online links http://www.buzzle.com/articles/types-of-inflation.html
http://economics.about.com/cs/money/a/inflation_terms.htm

h t t p : / / t u t o r 2 u . n e t / e c o n o m i c s / c o n t e n t / t o p i c s / i n f l a t i o n /
demand_pull_inflation.htm
http://www.investopedia.com/articles/05/012005.asp#axzz1Vl6PSh5C

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