ECON - CHAPTER 12
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if demand pull inflation occurs when the economy is already at potential GDP, then following the initial increase in aggregate demand, the
SAS curve shifts leftward
along the long-run phillips curve,
actual inflation is equal to expected inflation
the long-run phillips curve shows the relationship between the inflation rate and the unemployment rate when the
actual inflation rate equals the expected inflation rate
demand-pull inflation is an inflation that results from an initial
increase in aggregate demand
the long-run phillips curve is
vertical at the natural unemployment rate