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Tel Aviv Metro Map on This is called demand-pull inflation for the source of the upward pressure comes from high aggregate demand. High unemployment puts downward pressure on inflation. The second term, e, indicates that inflation may go up and down as a result of supply shocks. An example of such a shock could be the oil price increase in the 1970s. This is called cost-push inflation for adverse supply shocks are responsible for higher production costs and eventually higher inflation. BIBLIOGRAPHY. Laurence Ball, What Determines the Sacrifice Ratio? Monetary Policy (University of Chicago Press, 1994); Olivier Blanchard and Angelo Melino, Macroeconomics (Prentice Hall, 1999); Milton Friedman, The Role of Monetary Policy, American Economic Review (v. Tel Aviv Metro Map 2016.

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