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From course:

Economics A Level (DONEEEEEEE)

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Question:

How can Bottleneck Shortages lead to Demand Pull Inflation

Author: eric_galvao



Answer:

-If Demand grows Fast when Labour and Resources are already Full Used, then Output leads to Shortages [Positive Output Gap] This causes Prices to Rise and Firm’s Cost to INcrease -Price rising from Shortages in an Area of the Market can manfiest itself in other Markkets leading to General Inflation


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