Understanding Demand Pull Inflation

Peter Jordan explains demand pull inflation, focusing on its association with aggregate demand and the shift from AD1 to AD2. He discusses the positive output gap and its implications on macroeconomic objectives. The video evaluates the necessity of some inflation for growth and consumption, while highlighting the drawbacks of high inflation. Factors influencing demand pull inflation, such as consumption, investment, and government spending, are analyzed. The Keynesian perspective on spare capacity and its effect on inflation is also covered.

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