Discuss the impact of inflation shock on output and inflation-00166
This subjective question is related to the book/course
vu cs001 Computer Proficiency License .
It can also be found in
vu cs001 Mid Term Solved Past Paper No. 1.
Question 1: Discuss the impact of inflation shock on output and inflation.
Answer:
Inflation shock is a change in the cost of producing output which causes the the short run aggregate supply curve to shift.
It can be the result of change in the cost of raw materials or change in price of energy.
A positive inflation shock causes the short run aggregate supply curve to shift upward, and cause the inflation to rise
