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investment, export and import are more likely to happened change compared
to changed in raw material and the cost of production. This is because the
expenditure behavior of various agents in an economy is sensitive to the
change of economic conditions and thus the change in their expenditure can be
volatile. The fluctuation of cost of production in an economy can be very
minimal. because in short run the price cannot change immediately and it may
also First, due to sticky wage the cost of labour is expected to be stable in short
run. and as the above example of Second, natural disasters can affect the
supply of raw materials but they do not happen frequently. it will not always
happen and cause supply to decrease. Third, producers at large have much
concern about the cost of production and will take various measures to hedge
against the increase in of price of raw materials. Therefore in Since conclusion
the shift of AD is more likely to happened, it is concluded and this also means
that demand pull inflation are more likely to happen than compared to cost
push inflation.
Attention:
If you have mentioned
diagram 1 and 2 in your
essay, make sure that you
label your diagrams
accordingly.
Attention:
If you have mentioned
diagram 1 and 2 in your
essay, make sure that you
label your diagrams
accordingly.