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12.1 a) how is inflation measured? b) demand pull and cost push inflation…

- - - - market basket - represents gd/sevices we consume frequently
  - - - X(t) - inflation rate at a period of time
        X(t-1) - inflation rate at the previous period of time
  - - - increases interest rates
      - bank's profits may be eroded or eliminated
  - - - contractionary policy
    - - reduce G
      - contractionary policy
    - - reduce tax and company tax
- - - - frictional unemployment
        
        when indv voluntarily chooses to leave job for new one/ when new workers enter labour market
      - structural unemployment
        
        immobilities in labour market ex. wrong skills
  - - - fiscal policy
        
        boost AD
        
        expansionary policy
      - monetary policy
        
        increase AD
        
        expansionary policy