Since the higher resource prices are paid to suppliers elsewhere in the world, this also acts somewhat like a tax on spending,
hence aggregate demand falls.
But the effect of the higher prices, assuming they are typically paid to suppliers elsewhere in the world, also acts somewhat like a tax on spending,
hence aggregate demand falls.
Not exact matches
The whole point of inflation forecast targeting is that the Bank of Canada does not «accommodate» any shock to
Aggregate Demand that would change its internal forecast of future output and
hence future inflation.