Macroeconomics 11th Edition by Michael Parkin

Exercise 15

Use the following news clip to work Problems.
Official: China May Face Heavy Inflation Pressure
China is expected to face great inflationary pressure in the future due to higher costs and an abundant global money supply, a senior Chinese official said in an article published Tuesday.
He said inflation in China is also the result of excessive global liquidity from loose monetary policies adopted by developed nations, China's lending expansion, and a pile-up of outstanding foreign exchange funds.
China's consumer price index (CPI), a main gauge of inflation, rose 4.9 percent year on year in February, the same level as in January. The CPI data for March is scheduled to be released this week and is estimated to show a rise above 5 percent.
Draw a graph to illustrate the initial rise in the price level and the money wage rate response to a one-time rise in the price level.