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Refer to Article 3. Considering that the RBA kept rates on hold and unemployment is at an all-time low of 3.5%, we would expect the
Refer to Article 3. Considering that the RBA kept rates on hold and unemployment is at an all-time low of 3.5%, we would expect the economy to be operating at full employment . Ceteris paribus, if the RBA continued to keep rates on hold indefinitely, then we would expect the aggregate demand curve to remain unchanged , the short run aggregate supply curve to remain unchanged and the long run aggregate supply curve to shift to the right . This is due to the tight labour market, meaning that workers would have more bargaining power and would cause firms to increase prices. This is an example of cost-push inflation
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