Hello everyone,

I need help with a comment for each post (each comment for each post).

Thank you so much!

First post:

Financial shocks describe any change in borrowing conditions that changes the real interest rate at which people can borrow, spending shocks describe any change in aggregate expenditure at a given real interest rate and level of income, and supply shocks describe any change in production costs that leads suppliers to change the prices they charge at any given level of output. These three shocks combined in a taxonomy can make a powerful economic forecasting tool. What's interesting about it is as simple as it may look, it is a much more effective way to analyze the economy than a zillion different kinds of analysis out there. All one needs to do is figure out which type of macroeconomic shocks they're dealing with, then they can move on to finding out how that shock will affect the economy.

Second post:

The inputs to inflation are our expectations of inflation, demand-pull inflation, and cost-push inflation. If an employer expects that inflation will increase by 5%, then they will raise prices to compensate. When this occurs, employees will want their wages to also rise so they can have the same purchasing power. If multiple sectors of the economy respond the same way to an expected rise of 5%, then inflation will be what we think it will be. The other two inputs are caused by many factors, such as supply shocks and increased costs of raw materials. this was interesting because it shows some of the factors that explain why inflation is higher than in previous years at around 6.2%. One of the main factors is the supply shock facing the global economy. We have all heard of the ports being congested with queues of ships containing cargo. The basic principles of supply and demand tell us that when supply decreases, prices will rise. This is an example of demand-pull inflation because the increased demand for goods could not keep up with the supply. The laws of supply and demand tell us that when demand increases, businesses will respond by raising prices, ultimately increasing inflation.