5.2 Causes of Inflation

  1. Demand-Pull Inflation: Occurs when aggregate demand exceeds aggregate supply, leading to higher prices.

  2. Cost-Push Inflation: Results from an increase in the cost of production, such as rising wages or raw materials.

  3. Built-In Inflation: Arises from the expectation of future inflation, leading to higher wages and prices.

Previous5.1 InflationNext5.3 Effects of inflation on purchasing power

Last updated