Principles of Macroeconomics / Unit 6 MAC 0521 short lesson, about 20 seconds
Cost-Push Inflation
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The idea
Cost-push inflation happens when the cost of producing rises sharply, from wages or raw materials, and producers pass the increase into prices.
In practice
The oil price rises of the nineteen seventies are the standard example.
Where people slip
Here supply moves, so the price level rises while output falls. That combination is the stagflation of unit eight.
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