inflaation

Question 1

what are the three main causes of inflation

Answer 1

• demand pull
• cost push
• growth of money supply

Question 2

what is cost push inflation

Answer 2

when the costs of production for goods and services increase

Question 3

what are the causes of cost push inflation

Answer 3

• increase in input costs
• higher wage demands
• government regulations
• supply disruptions
• fall in exchange rate
• higher taxes on production

Question 4

what is demand pull inflation

Answer 4

is a type of inflation that occurs when aggregate demand increases leading to higher prices for goods and services

Question 5

what are the causes of demand pull inflation

Answer 5

• increase in consumption (C)
• increase in private sector investment (I)
• increase in government spending (G)
• increase in value of (X-M)

Question 6

what is growth of the money supply

Answer 6

an increase in the money supply - more money is chasing the same amount of goods and firms would be able to increase prices - consumers will pay higher prices as they have extra money to buy them

Question 7

what is shoe leather cost

Answer 7

searching for cheaper alternatives due to prices increasing - shoes would be worn down