Forms of inflation
- Cost-push inflation
- Demand inflation
Two big reasons cause inflation; one is the shortage of supply and another is an increase in demand. If right now the pencils we use are in balance with the companies’ production then there would be no sum rise in the prices of the pencils but the cost will substantially increase or decrease if either the demand is not met or the supply is more than what is needed.
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Similar ideas to Forms of 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.
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.
Demand shock
Demand shocks occur when the demand for products drops as people stop earning money. A tactic to fix this is to stimulate the economy. In 2008, Australia gave households cash and encouraged them to spend to jumpstart the economy.
In 2020, the problem is also a lac...
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