What's it? Demand-pull inflation is a type of inflation caused by an increase in aggregate demand. In a model of aggregate demand-aggregate supply, it occurs when the aggregate demand curve shifts to the right.Unlike cost-push inflation, which
Macroeconomics
Why the GDP Deflator Might Be Better Than the Consumer Price Index (CPI) to Measure Inflation
Accurately measuring inflation is a critical economic puzzle, impacting everything from central bank policies to household budgets. Two prominent tools used to gauge inflation are the Consumer Price Index (CPI) and the GDP Deflator. While the CPI
Structural Budget Deficits: Understanding the Long-Term Impact on Debt and Economy
Structural budget deficits are a hot topic in economics, often mentioned in news headlines but rarely explained clearly. Simply put, it occurs when a government spends more than it collects in revenue, and this gap persists even during economic
Structural Unemployment: Skills Gap and The Changing Economy
Structural unemployment disrupts the job market by creating a mismatch between the skills employers need and the skills workers possess. This skills gap arises from fundamental shifts in the economy, leaving many workers unemployed even during
Seigniorage Explained: Free Money for Government? (Inflation Risk)
Seigniorage is not just a fancy word for a lordship's tax (though it does have historical roots there). In economics, seigniorage refers to the profit a government makes by creating money. This page dives into it, explaining how it works, the
Monetary Policy – Tools for a Controlling Inflation and Growth [Purposes, Types]
Monetary policy plays a critical role in shaping a nation's economic health. It's a set of actions taken by the central bank to influence the money supply and credit availability within the economy. By adjusting these levers, the central bank aims to
Money: Functions, Types, Demand & Supply
What's it: Money is everything we use or accept widely as a means of payment for goods and services, including coins and banknotes. It also functions as a unit of account and a store of value. It replaces barter payments in the modern
Real Money vs Nominal Money: Understanding Value & Inflation
Real money might seem like a straightforward concept – the cash you hold in your wallet or the bills you use for everyday purchases. But there's more to the story than meets the eye. Real money, issued by a central bank, acts as legal tender within a
Money Demand: Explained (Transactions, Precautionary, Speculative)
Money demand is the often-overlooked force behind stable prices in an economy. It refers to the total amount of cash that individuals and businesses choose to hold, instead of investing it in stocks, bonds, or other assets. This concept plays a vital
Monetary Stimulus: Boosting Economies with Lower Rates
Monetary stimulus is a tool used by central banks to influence economic activity. It involves changes in monetary policy designed to increase the money supply in circulation. This strategy aims to stimulate economic growth by making borrowing cheaper
Demand-Constrained Economy: Understanding Low Demand and Solutions
A demand-constrained economy describes a situation where overall spending in an economy, also known as aggregate demand, falls short of what's needed to utilize all available resources and production capacity. This can lead to a number of challenges,
Restocking and Destocking in the Business Cycle: Optimizing Inventory
Restocking, a process of replenishing inventory, plays a vital role. It's a balancing act for businesses, ensuring they have enough stock to meet customer demand while avoiding excessive inventory that can tie up valuable resources.However,