The central question of distribution between volume and price effects

When demand for goods and services, labour or financial or real estate assets increases, there are two possible effects: An increase in the corresponding supply, with no effect on prices; An increase in prices, if supply does not react. Examples include: The reaction to an increase in demand for equities (additional share issuance or increase in share prices); The reaction to an increase in real estate purchases (additional housing construction or increase in real estate prices); The reaction to an increase in demand for labour (increase in the participation rate and in employment or increase in wages); The reaction to an increase in domestic demand (increase in production and imports or increase in inflation); The reaction to an increase in demand for commodities (increase in production or in prices). In all cases, it would be preferable for the reaction to be borne by volumes and not prices. In the United States and the euro zone, the reaction has tended to be borne by volumes when it comes to labour and domestic demand, and prices when it comes to equities, real estate and commodities.