Protectionist Policy

Weaker Competition as a Type of Inflationary Supply Shock

Climate Events as Inflationary Supply Shocks

Oil Price Shocks as an Inflationary Supply Shock for Net Importers

Mechanisms of Cost-Push Inflation: WS vs. PS Curve Shifts

An economist is analyzing recent events in a country's economy. They observe three distinct developments: a sudden and severe drought has damaged major crops, leading to higher food production costs; the central bank has lowered interest rates to encourage investment; and consumer spending has increased due to a rise in household wealth. To isolate the effect of a supply-side change on the price level, which of these developments should the economist identify as the inflationary shock?

Analyzing a Government Policy's Impact on Inflation

Analyzing an Oil Price Increase as an Inflationary Shock

When analyzing an inflationary shock, such as a sharp rise in global energy prices, the standard economic approach is to assume that aggregate demand also increases, leading to a rise in both the inflation rate and the level of economic output.

Disaggregating Economic Events to Identify an Inflationary Shock

Evaluating an Economic Analyst's Statement

An economy can experience various events that lead to a rise in the overall price level. Match each economic event to its correct classification as either a supply-side shock that directly increases inflation or a demand-side change.

Differentiating Sources of Inflation

When analyzing a change that originates from the supply side of the economy, such as a sudden increase in the cost of raw materials, economists hold the ______ side of the economy constant to isolate the event's direct impact on the inflation rate.

A country that is a net importer of energy experiences a sudden, sharp increase in global oil prices. Assuming the demand side of the economy remains constant, arrange the following events in the logical sequence that describes how this supply-side event leads to a higher inflation rate.

Upward WS Curve Shift as a Source of Cost-Push Inflation

Expectations-Driven Inflation