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    What diagram would you draw for this 25 marker? 'Evaluate whether low and stable inflation is beneficial to an economy'
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    (Original post by Khalida1)
    What diagram would you draw for this 25 marker? 'Evaluate whether low and stable inflation is beneficial to an economy'
    I'm going to move this to Economics Study Help so you can hopefully get an answer to this.
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    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 imports
 
 
 
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