Define Cost-Push Inflation

question 84

Essay

Define cost-push inflation. Using an AS/AD diagram, illustrate how cost-push inflation affects the level of aggregate output and the price level in the economy. Suppose that the government uses expansionary fiscal policy to counter the effects of the cost-push inflation. Indicate on the diagram the impact of this policy on the price level and level of aggregate output.

---

Definitions:

Gratification

The satisfaction or pleasure felt when a need or desire is fulfilled.

Self-Cognitive Perspective

An approach in psychology that emphasizes the role of cognitive processes in understanding the self, including thoughts, beliefs, and attitudes towards oneself.

Personal Helplessness

A state in which an individual feels they lack control over situations and outcomes in their life, often leading to decreased motivation and depression.

Internal Locus

A psychological term referring to individuals who believe that they have control over the outcomes of their actions and the events in their lives.