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In the long run we will return to the normal equilibrium. Cost-push inflation occurs when the short-run aggregate supply curve shifts leftward, as from AS1 to As2. If the government attempts to counter the decrease in real domestic output by increasing AD1 to AD2, the price level rises. Essentially, the economy moves from point a to b to c.
fluctuations An example of cost push inflation is an - ECON... This preview shows document pages 322 - 325. Sign up to view the full document. Fluctuations an example of cost push inflation is an. This preview shows pages 322â325. Sign up to view the full content. This preview has intentionally blurred sections. Sign up to view the full version. This preview has intentionally blurred sections.