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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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Inflation depreciates currency's value
The currency depreciation was seen in Venezuela when the bolivar's purchasing power dropped so low that a person sold sculptures made out of money because as raw material it was worth more than a bill.
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Inflation
In economics, inflation is a general increase in the prices of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduction in the purchasing power of money.
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Other curated ideas on this topic:
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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