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Define demand-pull inflation. Using the AS / AD model, explain how demand-pull inflation affects the level of aggregate output and the price level in the
Define demand-pull inflation. Using theAS/ADmodel, explain how demand-pull inflation affects the level of aggregate output and the price level in the economy (which curve shifts, in what direction, and what happens to equilibrium output and price level). Give an example of macroeconomic policy that can be used to counter the effects of demand-pull inflation and discuss its effect on the equilibrium output and price level.
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