Consider an economy initially in a state of equilibrium with stable prices and a constant rate of unemployment. If there is a sudden and significant increase in overall spending, which of the following sequences best describes the initial process that leads to inflation?

Analyzing an Economic Upswing

The Onset of Inflation from a Demand Shock

An economy is initially in a state of equilibrium with stable prices and wages. A positive shock to aggregate demand occurs. Arrange the following events in the chronological order they would happen, starting from the initial impact of the shock.