ECON - CHAPTER 12

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