What diagram would you draw for this 25 marker? 'Evaluate whether low and stable inflation is beneficial to an economy'
Diagram for A level Economics essay watch
- Thread Starter
- 12-06-2016 22:08
Offline21Very Important PosterStudy Helper
- Very Important Poster
- Study Helper
- 13-06-2016 02:47
- 16-06-2016 00:10
You could show:
1) Wage price spiral. AD rises, then SRAS rises, then AD rises, then SRAS rises.
2) Cost push inflation (SRAS shift) leading to falling real national output as households can afford less on same incomes*
3) Deflationary spiral (in evaluation)... falling AD
* and exports become relatively less price-competitive**
** and domestic producers switch to relatively more price competitive importsLast edited by AgentClank; 16-06-2016 at 00:12.