ʺInflation Gives Saudis Food for Thoughtʺ
ʺMy boss sent me back to return the milk - itʹs too expensive,ʺ said the Pakistani driver for a middle-class Saudi family at the checkout counter of the Al-Othaim supermarket. Saudi Arabia
Is enjoying an unprecedented economic boom as sectors [have] increased activity to meet the big
Internal demand.
The story describes

Question

Quizplus · Accepted Answer

The story describes how there is increased internal demand in Saudi Arabia, which is leading to higher prices for goods such as milk. This is a classic example of demand-pull inflation, where there is too much money chasing too few goods. Cost-push inflation would occur if there were some shock to the supply side of the economy (e.g. a drought that reduces the supply of milk), but this is not described in the article. Stagflation occurs when there is both high inflation and high unemployment, but there is no mention of unemployment in the article. A rightward shift in the short-run Phillips curve would mean that there is higher inflation for a given level of unemployment, which is not described in the article either.