Cost-Push Inflation

Cost-Push Inflation

Cost-push inflation is the decrease in the aggregate supple of goods and services stemming from an increase in the cost of production.

An increase in the costs of raw materials or labor can contribute to cost-pull inflation.

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Cost-Push Inflation vs. Demand-Pull Inflation: What's the Difference?

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Demand-Pull Inflation

Demand-pull inflation is the increase in aggregate demand, categorized by the four sections of the macroeconomy: households, business. governments. and foreign buyers.

Demand-pull inflation can be cause by an expanding economy, increased government spending, or overseas growth.

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  • Inflation is a situation of rising prices in the economy.
  • Inflation is a sustained increase in the general price level in an economy. Inflation means an increase in the cost of living as the price of goods and services rise.
  • The rate of inflation measures the annual percentage change in the general price level.

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Definition of Inflation - Economics Help

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Gross Domestic Product (GDP)
  • This is the most basic indicator of the overall market value of a nation's finished domestic goods and services and the country's health and size.
  • There are two types of GDP: real and nominal. The former is the economic output after inflation is factored in while the latter does not take inflation into account.
  • The GDP is important because it gives us an idea of whether the economy of the country is growing or contracting.

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GDP vs. GNP: What's the Difference?

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What is PPP ?

PPP is an economic theory that compares different countries' currencies through a "basket of goods" approach.

According to this concept, two currencies are in equilibrium or considered being at par—when a basket of goods is priced the same in both countries, taking into account the exchange rates.

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What Is Purchasing Power Parity (PPP)?

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