Demand Pull Inflation Diagram Sras. Explanation of the above demand pull inflation graph is as follows the x axis measures the aggregate demand and supply and the y axis measures the general price level. In fact it is caused by both.
From the above diagram we can see that when supply reduces from sras 0 to sras 1 due to reduced output from gdp to gdp 1 the price is pushed up from p 0 to p 1 even though demand hasn t increased. Real national income. Increase in business taxes e g.
Demand pull inflation definition.
When there is an increase in costs of production. The last time this happened to any great extent in the uk economy was in the late 1980s. When there is an increase in costs of production. Increase in raw material prices 2.
