Aggregate Demand

and Supply and

Macroeconomic
Problems
 Macroeconomic Objectives
■ Distinction between microeconomics
and macroeconomics
■ The major macroeconomic issues
✜ economic growth
✜ unemployment
✜ inflation
✜ balance of payments and exchange rates
✦ balance of payments deficits and surpluses
✦ exchange rate movements
 Economic growth (average % per annum),
Unemployment (average %), Inflation (average % per annum)
 Economic growth (average % per annum),
Unemployment (average %), Inflation (average % per annum)
 Economic growth (average % per annum),
Unemployment (average %), Inflation (average % per annum)
 The Circular Flow of Income
■ The inner flow
 The circular flow of income

Firms

Consumption of
Factor domestically
payments produced goods
and services (Cd)

Households
 The Circular Flow of Income
■ Withdrawals
✜ net saving
✜ net taxes
✜ import expenditure
■ Injections
✜ investment
✜ government expenditure
✜ export expenditure
 The circular flow of income

INJECTIONS

Export
expenditure (X)
Investment (I)
Government
Consumption of expenditure (G)

Factor domestically
BANKS, etc GOV. ABROAD
payments produced goods
and services (Cd)
Import
Net expenditure (M)
Net taxes (T)
saving (S)

WITHDRAWALS
 The Circular Flow of Income
■ The relationship between injections and
withdrawals
✜ the links between them
 The circular flow of income

INJECTIONS

Export
expenditure (X)
Investment (I)
Government
Consumption of expenditure (G)

Factor domestically
BANKS, etc GOV. ABROAD
payments produced goods
and services (Cd)
Import
Net expenditure (M)
Net taxes (T)
saving (S)

WITHDRAWALS
 The Circular Flow of Income

■ The relationship between injections and

withdrawals
✜ the links between them
✜ planned injections may not equal planned
withdrawals
 The Circular Flow of Income

■ The relationship between injections and

withdrawals
✜ the links between them
✜ planned injections may not equal planned
withdrawals

■ Equilibrium in the circular flow

 The circular flow of income

INJECTIONS

Export
expenditure (X)
Investment (I)
Government
Consumption of expenditure (G)

Factor domestically
BANKS, etc GOV. ABROAD
payments produced goods
and services (Cd)
Import
Net expenditure (M)
Net taxes (T)
saving (S)

WITHDRAWALS
 The Circular Flow of Income

■ The relationship between injections and

withdrawals
✜ the links between them
✜ planned injections may not equal planned
withdrawals

■ Equilibrium in the circular flow

■ The circular flow and the four
macroeconomic objectives
 The circular flow of income

INJECTIONS

Export
expenditure (X)
Investment (I)
Government
Consumption of expenditure (G)

Factor domestically
BANKS, etc GOV. ABROAD
payments produced goods
and services (Cd)
Import
Net expenditure (M)
Net taxes (T)
saving (S)

WITHDRAWALS
 Measuring national income
■ GDP: the measure of national income
■ Methods of measuring GDP
✜ the product approach
✜ the income approach
✜ the expenditure approach
The circular flow of national income and expenditure
The circular flow of national income and expenditure
(1) Production

(2) Incomes (3) Expenditure

 Measuring national income
■ GDP: the measure of national income
■ Methods of measuring GDP
✜ the product approach
✜ the income approach
✜ the expenditure approach

■ The product approach

 Measuring national income
■ GDP: the measure of national income
■ Methods of measuring GDP
✜ the product approach
✜ the income approach
✜ the expenditure approach

■ The product approach

✜ measuring GVA
UK GVA (product-based measure): 2001
Agriculture, forestry and fishing £8 241 m
Mining, energy and water supply £41 378 m

Manufacturing
£153 132 m

Construction £47 327 m

Wholesale and retail trade; repairs £106 766 m

Hotels and restaurants £29 359m
Transport and communication £70 252 m

Banking, finance, insurance, etc. £6 667 m

Letting of property £209 839 m

Public administration and defence £42 096 m

Education, health and social work £114 069 m

Other services £45 101 m

UK GVA (product-based measure): 2001
Agriculture, forestry and fishing £8 241 m
Mining, energy and water supply £41 378 m

Manufacturing
£153 132 m

Construction £47 327 m

Wholesale and retail trade; repairs £106 766 m

Hotels and restaurants £29 359m
Transport and communication £70 252 m

Banking, finance, insurance, etc. £6 667 m

Letting of property £209 839 m

Public administration and defence £42 096 m

Education, health and social work £114 069 m

Other services £45 101 m

Total GVA £874 227 m

UK GVA (product-based measure): 2001
Agriculture, forestry and fishing £8 241 m 0.9
Mining, energy and water supply £41 378 m 4.7

Manufacturing
£153 132 m 17.5

Construction £47 327 m 5.4

Wholesale and retail trade; repairs £106 766 m 12.2

Percentage of GVA
Hotels and restaurants £29 359m 3.4
Transport and communication £70 252 m 8.0

Banking, finance, insurance, etc. £6 667 m 0.8

Letting of property £209 839 m 24.0

Public administration and defence £42 096 m 4.8

Education, health and social work £114 069 m 13.0

Other services £45 101 m 5.2

Total GVA £874 227 m 100.0

 Measuring national income
■ GDP: the measure of national income
■ Methods of measuring GDP
✜ the product approach
✜ the income approach
✜ the expenditure approach

■ The product approach

✜ measuring GVA
■ The income approach
UK GVA by category of income: 2001

Compensation of employees
(wages and salaries)
£556 371 m

Operating surplus
(gross profit, rent and interest of firms
government and other institutions)
£238 625 m

Mixed incomes
£60 073 m
Tax less subsidies on production
(other than those on products) plus
statistical discrepancy £19 158m
UK GVA by category of income: 2001

Compensation of employees
(wages and salaries)
£556 371 m

Operating surplus
(gross profit, rent and interest of firms
government and other institutions)
£238 625 m

Mixed incomes
£60 073 m
Tax less subsidies on production
(other than those on products) plus
statistical discrepancy £19 158m

Total GVA £874 227m

UK GVA by category of income: 2001

Compensation of employees
(wages and salaries) 63.6
£556 371 m

Percentage of GVA
Operating surplus
(gross profit, rent and interest of firms
government and other institutions) 27.3
£238 625 m

Mixed incomes 6.9

£60 073 m
Tax less subsidies on production
(other than those on products) plus 2.2
statistical discrepancy £19 158m

Total GVA £874 227m 100.0

 Measuring national income
■ GDP: the measure of national income
■ Methods of measuring GDP
✜ the product approach
✜ the income approach
✜ the expenditure approach

■ The product approach

✜ measuring GVA
■ The income approach
■ From GVA to GDP
 UK GDP (product-based measure): 2001

GVA (gross value added at basic prices) £874 227m

 UK GDP (product-based measure): 2001

GVA (gross value added at basic prices) £874 227m

plus Taxes on products £120 499m

 UK GDP (product-based measure): 2001

GVA (gross value added at basic prices) £874 227m

plus Taxes on products £120 499m

less Subsidies on products £6 712m

 UK GDP (product-based measure): 2001

GVA (gross value added at basic prices) £874 227m

plus Taxes on products £120 499m

less Subsidies on products £6 712m

GDP (at market prices) £988 014m

 Measuring national income
■ GDP: the measure of national income
■ Methods of measuring GDP
✜ the product approach
✜ the income approach
✜ the expenditure approach

■ The product approach

✜ measuring GVA
■ The income approach
■ The expenditure approach
UK GDP by category of expenditure, GNY and NNY: 2001
£million

Consumption expenditure of households and NPISH (C) 655 265

Government final consumption (G) 190 663
Gross capital formation (I) 164 048
Exports of goods and services (X) 268 451
less Imports of goods and services (M) −290 912
Statistical discrepancy 499

Gross domestic product (GDP) (at market prices) 988 014

 Measuring national income
■ GDP: the measure of national income
■ Methods of measuring GDP
✜ the product approach
✜ the income approach
✜ the expenditure approach

■ The product approach

✜ measuring GVA
■ The income approach
✜ from GVA to GDP
■ From GDP to net national income (NNY)
UK GDP by category of expenditure, GNY and NNY: 2001
£million

Consumption expenditure of households and NPISH (C) 655 265

Government final consumption (G) 190 663
Gross capital formation (I) 164 048
Exports of goods and services (X) 268 451
less Imports of goods and services (M) −290 912
Statistical discrepancy 499

Gross domestic product (GDP) (at market prices) 988 014

plus Net income from abroad 5 756

Gross national income (GNY) 993 770

UK GDP by category of expenditure, GNY and NNY: 2001
£million

Consumption expenditure of households and NPISH (C) 655 265

Government final consumption (G) 190 663
Gross capital formation (I) 164 048
Exports of goods and services (X) 268 451
less Imports of goods and services (M) −290 912
Statistical discrepancy 499

Gross domestic product (GDP) (at market prices) 988 014

plus Net income from abroad 5 756

Gross national income (GNY) 993 770

less Capital consumption (depreciation) −111 275

Net national income (NNY) 882 495

 Measuring national income
■ GDP as a measure of social welfare
✜ benefits of using GDP

✜ weaknesses

■ The Human Development Index (HDI)

Human Development Index (HDI) for selected countries (2000)
Human Development Index (HDI) for selected countries (2000)
Human Development Index (HDI) for selected countries (2000)
Human Development Index (HDI) for selected countries (2000)
Human Development Index (HDI) for selected countries (2000)
Human Development Index (HDI) for selected countries (2000)
Human Development Index (HDI) for selected countries (2000)
Human Development Index (HDI) for selected countries (2000)
Human Development Index (HDI) for selected countries (2000)
 Growth and the Business Cycle
■ Growth in actual and potential growth
■ Economic growth and the business cycle
✜ fluctuations in actual growth
 The business cycle

Potential output
National output

Actual
output

O
Time
 Growth and the Business Cycle

■ Growth in actual and potential output

■ Economic growth and the business
cycle
✜ fluctuations in actual growth
✜ the phases of the business cycle
 The business cycle

Potential output
National output

3
4
2 Actual
3
output
4
2 1

O
Time
 Growth and the Business Cycle

■ Growth in actual and potential output

■ Economic growth and the business
cycle
✜ fluctuations in actual growth
✜ the phases of the business cycle
✜ trend growth
 The business cycle

Potential output

Trend
National output

output

Actual
output

O
Time
 Growth and the Business Cycle
■ Growth in actual and potential growth
■ Economic growth and the business cycle
✜ fluctuations in actual growth
✜ the phases of the business cycle
✜ long-term output trend
✜ the business cycle in practice
 Growth and the Business Cycle
■ Growth in actual and potential growth
■ Economic growth and the business cycle
✜ fluctuations in actual growth
✜ the phases of the business cycle
✜ long-term output trend
✜ the business cycle in practice
✦ the irregularity of the cycle
 Growth and the Business Cycle
■ Growth in actual and potential growth
■ Economic growth and the business cycle
✜ fluctuations in actual growth
✜ the phases of the business cycle
✜ long-term output trend
✜ the business cycle in practice
✦ the irregularity of the cycle
✦ the length of the phases
 Growth and the Business Cycle
■ Growth in actual and potential growth
■ Economic growth and the business cycle
✜ fluctuations in actual growth
✜ the phases of the business cycle
✜ long-term output trend
✜ the business cycle in practice
✦ the irregularity of the cycle
✦ the length of the phases
✦ the magnitude of the phases
 Growth and the Business Cycle

■ Causes of fluctuations in actual growth

✜ aggregate demand

✜ aggregate demand relative to potential

output

■ Actual growth in practice

✜ experience since 1970
 Growth rates in selected industrial countries
10
9 UK
8
Annual growth rate (%)

7
6
5
4
3
2
1
0
-1
-2
-3
1970 1975 1980 1985 1990 1995 2000
 Growth rates in selected industrial countries
10
9 UK
8
Annual growth rate (%)

7
6
5
4
3
2
1
0
-1
-2
-3
1970 1975 1980 1985 1990 1995 2000
 Growth rates in selected industrial countries
10
9 UK
8 France
Annual growth rate (%)

7
6
5
4
3
2
1
0
-1
-2
-3
1970 1975 1980 1985 1990 1995 2000
 Growth rates in selected industrial countries
10
9 UK
8 France
Annual growth rate (%)

7
6
5
4
3
2
1
0
-1
-2
-3
1970 1975 1980 1985 1990 1995 2000
 Growth rates in selected industrial countries
10
9 UK Germany

8 France
Annual growth rate (%)

7
6
5
4
3
2
1
0
-1
-2
-3
1970 1975 1980 1985 1990 1995 2000
 Growth rates in selected industrial countries
10
9 UK Germany

8 France
Annual growth rate (%)

7
6
5
4
3
2
1
0
-1
-2
-3
1970 1975 1980 1985 1990 1995 2000
 Growth rates in selected industrial countries
10
9 UK Germany

8 France USA
Annual growth rate (%)

7
6
5
4
3
2
1
0
-1
-2
-3
1970 1975 1980 1985 1990 1995 2000
 Growth rates in selected industrial countries
10
9 UK Germany

8 France USA
Annual growth rate (%)

7
6
5
4
3
2
1
0
-1
-2
-3
1970 1975 1980 1985 1990 1995 2000
 Growth rates in selected industrial countries
10
9 UK Germany
Japan
8 France USA
Annual growth rate (%)

7
6
5
4
3
2
1
0
-1
-2
-3
1970 1975 1980 1985 1990 1995 2000
 Growth rates in selected industrial countries
10
9 UK Germany
Japan
8 France USA
Annual growth rate (%)

7
6
5
4
3
2
1
0
-1
-2
-3
1970 1975 1980 1985 1990 1995 2000
 Growth and the Business Cycle
■ Causes of potential growth
✜ increases in the quantity of factors
✦ capital
✦ labour
✦ land and raw materials
✦ the problem of diminishing returns

✜ increases in factor productivity

■ Policies to achieve growth
✜ demand-side and supply-side policies
✜ market-orientated and interventionist
policies
 Unemployment
■ The meaning of 'unemployment'

■ The costs of unemployment

■ Official measures of unemployment

✜ claimant unemployment
✦ doclaimant statistics give a true picture of
unemployment?

✜ standardised unemployment (ILO / OECD)

 Unemployment rates in selected industrial countries
14 UK

12
Unemployment (% of workforce)

10

0
1970 1975 1980 1985 1990 1995 2000
 Unemployment rates in selected industrial countries
14 UK

12
Unemployment (% of workforce)

10

0
1970 1975 1980 1985 1990 1995 2000
 Unemployment rates in selected industrial countries
14 UK
France
12
Unemployment (% of workforce)

10

0
1970 1975 1980 1985 1990 1995 2000
 Unemployment rates in selected industrial countries
14 UK
France
12
Unemployment (% of workforce)

10

0
1970 1975 1980 1985 1990 1995 2000
 Unemployment rates in selected industrial countries
14 UK Germany
France
12
Unemployment (% of workforce)

10

0
1970 1975 1980 1985 1990 1995 2000
 Unemployment rates in selected industrial countries
14 UK Germany
France
12
Unemployment (% of workforce)

10

0
1970 1975 1980 1985 1990 1995 2000
 Unemployment rates in selected industrial countries
14 UK Germany
France USA
12
Unemployment (% of workforce)

10

0
1970 1975 1980 1985 1990 1995 2000
 Unemployment rates in selected industrial countries
14 UK Germany
France USA
12
Unemployment (% of workforce)

10

0
1970 1975 1980 1985 1990 1995 2000
 Unemployment rates in selected industrial countries
14 UK Germany Japan
France USA
12
Unemployment (% of workforce)

10

0
1970 1975 1980 1985 1990 1995 2000
 Unemployment rates in selected industrial countries
14 UK Germany Japan
France USA
12
Unemployment (% of workforce)

10

0
1970 1975 1980 1985 1990 1995 2000
 Unemployment rates in selected industrial countries
14 UK Germany Japan
France USA OECD
12
Unemployment (% of workforce)

10

0
1970 1975 1980 1985 1990 1995 2000
 Unemployment rates in selected industrial countries
14 UK Germany Japan
France USA OECD
12
Unemployment (% of workforce)

10

0
1970 1975 1980 1985 1990 1995 2000
Standardised unemployment rates in different
sectors of the labour market (2002)
Standardised unemployment rates in different
sectors of the labour market (2002)
Standardised unemployment rates in different
sectors of the labour market (2002)
Standardised unemployment rates in different
sectors of the labour market (2002)
 Unemployment

■ Unemployment and the labour market

✜ the aggregate demand and supply of labour
✜ equilibrium in the model
 Disequilibrium unemployment

ASL
Average (real) wage rate

We

ADL

O
Qe
No. of workers
 Unemployment
■ Unemployment and the labour market
✜ the aggregate demand and supply of labour
✜ equilibrium in the model
✜ disequilibrium unemployment
 Disequilibrium unemployment

ASL
Average (real) wage rate

B A
W2

We

ADL

O Q2 Q1
No. of workers
 Unemployment

■ Unemployment and the labour market

✜ the aggregate demand and supply of labour
✜ equilibrium in the model
✜ disequilibrium unemployment
✜ equilibrium unemployment
 Equilibrium unemployment

ASL
Average (real) wage rate

e
We

ADL

O
Qe
No. of workers
 Equilibrium unemployment

ASL N
Average (real) wage rate

e d
We

ADL

O
Qe Q2
No. of workers
 Equilibrium and disequilibrium unemployment

ASL
Average (real) wage rate

e
We

ADL

O
Qe
No. of workers
 Equilibrium and disequilibrium unemployment

ASL
Average (real) wage rate

Disequilibrium
unemployment

b a
W2
e
We

ADL

No. of workers
 Equilibrium and disequilibrium unemployment

ASL
N
Average (real) wage rate

Disequilibrium
unemployment

b a c
W2
e
We Equilibrium
unemployment

ADL

No. of workers
 Unemployment

■ Disequilibrium unemployment

✜ real-wage (classical) unemployment

✜ demand-deficient (cyclical) unemployment

✜ unemployment arising from a growth in the

labour supply
 Unemployment

■ Equilibrium unemployment
✜ frictional (search) unemployment

✜ structural unemployment
✦ changing pattern of demand

✦ technological unemployment

✦ regional unemployment

✜ seasonal unemployment
 Aggregate Demand and Supply
■ The aggregate demand curve
Price level Aggregate demand and aggregate supply

AD

National output
 Aggregate Demand and Supply

■ The aggregate demand curve

✜ Why aggregate demand curves slope
downwards
 Aggregate Demand and Supply

■ The aggregate demand curve

✜ Why aggregate demand curves slope
downwards
✦ import effect
Price level Aggregate demand and aggregate supply

AD

National output
 Aggregate Demand and Supply

■ The aggregate demand curve

✜ Why aggregate demand curves slope
downwards
✦ import effect
✦ interest-rate effect
Price level Aggregate demand and aggregate supply

AD

National output
 Aggregate Demand and Supply

■ The aggregate demand curve

✜ Why aggregate demand curves slope
downwards
✦ import effect
✦ interest-rate effect
✦ savings effect
Price level Aggregate demand and aggregate supply

AD

National output
 Aggregate Demand and Supply
■ The aggregate demand curve
✜ Why aggregate demand curves slope
downwards
✦ import effect
✦ interest-rate effect
✦ savings effect

■ The aggregate supply curve

 Aggregate demand and aggregate supply

AS
Price level

AD

National output
 Aggregate Demand and Supply
■ The aggregate demand curve
✜ Why aggregate demand curves slope
downwards
✦ import effect
✦ interest-rate effect
✦ savings effect

■ The aggregate supply curve

✜ Why aggregate supply curves generally
slope upwards
 Aggregate demand and aggregate supply

AS
Price level

AD

National output
 Aggregate Demand and Supply
■ The aggregate demand curve
✜ Why aggregate demand curves slope
downwards
✦ import effect
✦ interest-rate effect
✦ savings effect
■ The aggregate supply curve
✜ Why aggregate supply curves generally
slope upwards
■ Equilibrium
 Aggregate demand and aggregate supply

AS
Price level

Pe

AD

National output
 Aggregate demand and aggregate supply

AS
Price level

Pe
b a
P2

AD

National output
 Aggregate Demand and Supply
■ The aggregate demand curve
✜ Why aggregate demand curves slope
downwards
✦ import effect
✦ interest-rate effect
✦ savings effect

■ The aggregate supply curve

✜ Why AS curves generally slope upwards
■ Equilibrium
✜ Effect of a shift in the AD curve
 Inflation

■ Defining inflation
■ The costs of inflation
✜ redistribution
✜ uncertainty
✜ balance of payments
✜ resources used to cope with inflation

■ Experience of inflation since 1965

 Inflation rates in selected industrial countries
26
24 UK
22
Inflation (% increase in retail prices)

20
18
16
14
12
10
8
6
4
2
0
-2
1965 1970 1975 1980 1985 1990 1995 2000
 Inflation rates in selected industrial countries
26
24 UK
22
Inflation (% increase in retail prices)

20
18
16
14
12
10
8
6
4
2
0
-2
1965 1970 1975 1980 1985 1990 1995 2000
 Inflation rates in selected industrial countries
26
24 UK
22 EU 15
Inflation (% increase in retail prices)

20
18
16
14
12
10
8
6
4
2
0
-2
1965 1970 1975 1980 1985 1990 1995 2000
 Inflation rates in selected industrial countries
26
24 UK
22 EU 15
Inflation (% increase in retail prices)

20
18
16
14
12
10
8
6
4
2
0
-2
1965 1970 1975 1980 1985 1990 1995 2000
 Inflation rates in selected industrial countries
26
24 UK USA
22 EU 15
Inflation (% increase in retail prices)

20
18
16
14
12
10
8
6
4
2
0
-2
1965 1970 1975 1980 1985 1990 1995 2000
 Inflation rates in selected industrial countries
26
24 UK USA
22 EU 15
Inflation (% increase in retail prices)

20
18
16
14
12
10
8
6
4
2
0
-2
1965 1970 1975 1980 1985 1990 1995 2000
 Inflation rates in selected industrial countries
26
24 UK USA
22 EU 15 Japan
Inflation (% increase in retail prices)

20
18
16
14
12
10
8
6
4
2
0
-2
1965 1970 1975 1980 1985 1990 1995 2000
 Inflation rates in selected industrial countries
26
24 UK USA
22 EU 15 Japan
Inflation (% increase in retail prices)

20
18
16
14
12
10
8
6
4
2
0
-2
1965 1970 1975 1980 1985 1990 1995 2000
 Inflation rates in selected industrial countries
26
24 UK USA
OECD
22 EU 15 Japan
Inflation (% increase in retail prices)

20
18
16
14
12
10
8
6
4
2
0
-2
1965 1970 1975 1980 1985 1990 1995 2000
 Inflation rates in selected industrial countries
26
24 UK USA
OECD
22 EU 15 Japan
Inflation (% increase in retail prices)

20
18
16
14
12
10
8
6
4
2
0
-2
1965 1970 1975 1980 1985 1990 1995 2000
 Inflation
■ Types of inflation
✜ demand pull
 Demand-pull inflation

AS
Price level

P1

AD1

O Q1
National output
 Demand-pull inflation

AS
Price level

P1
AD2

AD1

O Q1
National output
 Demand-pull inflation

AS
Price level

P2

P1
AD2

AD1

O Q1 Q2
National output
 Inflation
■ Types of inflation
✜ demand pull
✜ cost push
 Inflation
■ Types of inflation
✜ demand pull
✜ cost push
✦ wage push
 Inflation
■ Types of inflation
✜ demand pull
✜ cost push
✦ wage push
✦ profit push
 Inflation
■ Types of inflation
✜ demand pull
✜ cost push
✦ wage push
✦ profit push
✦ import-price push
 Cost-push inflation

AS1
Price level

P1

AD

O Q1
National output
 Cost-push inflation

AS2
AS1
Price level

P1

AD

O Q1
National output
 Cost-push inflation

AS2
AS1
Price level

P2
P1

AD

O Q2 Q1
National output
 Inflation
■ Types of inflation
✜ demand pull
✜ cost push
✦ wage push
✦ profit push
✦ import-price push
✜ the interaction of demand-pull and cost-
push inflation
 The interaction of demand-pull and cost-push inflation

AS1
Price level

P1

AD1

National output
 The interaction of demand-pull and cost-push inflation

AS2
AS1
Price level

P2

P1

AD2

AD1

National output
 The interaction of demand-pull and cost-push inflation

AS3 AS
2
AS1

P3
Price level

P2

P1 AD3

AD2

AD1

National output
 Inflation
■ Types of inflation
✜ demand pull
✜ cost push
✦ wage push
✦ profit push
✦ import-price push

✜ structural (demand shift)

 Inflation
■ Types of inflation
✜ demand pull
✜ cost push
✦ wage push
✦ profit push
✦ import-price push

✜ structural (demand shift)

✜ expectations and inflation
 Inflation
■ Types of inflation
✜ demand pull
✜ cost push
✦ wage push
✦ profit push
✦ import-price push

✜ structural (demand shift)

✜ expectations and inflation

■ Policies to tackle inflation

 Inflation
■ Types of inflation
✜ demand pull
✜ cost push
✦ wage push
✦ profit push
✦ import-price push

✜ structural (demand shift)

✜ expectations and inflation

■ Policies to tackle inflation

✜ demand-side policies
 Inflation
■ Types of inflation
✜ demand pull
✜ cost push
✦ wage push
✦ profit push
✦ import-price push

✜ structural (demand shift)

✜ expectations and inflation

■ Policies to tackle inflation

✜ demand-side policies
✜ supply-side policies