Demand pull inflation and cost push inflation are both two main causes of inflation. They differ because the cause of the inflation is different.
EXPLANATION
Demand pull inflation and cost push inflation are both the main causes of inflation. Demand pull inflation is the most common cause of inflation. Demand pull inflation will happen when the supply of a product or a service is overwhelming, so the demand for a specific good or service outspaces the supply. The customers need the product, so the customers are willing to pay a higher price. They have no choice to buy the product or service at a higher price point.
The second one that causes inflation is cost-push inflation. The cost-push inflation will happen if the demand for goods and services stays the same, but the supply constraints increase the price of the services and goods.
The definition of inflation itself is the increase in the price of goods and services over time. The increase in the cost of our daily living is caused by inflation. People will have to earn more money to buy food, fill the gas tank, and get a haircut as the year goes by.
Inflation lowers the power of purchasing in every currency unit. For example, in the United States, there will be a decrease in value on the dollar. Year by year, the value of the dollar is different. The money will buy less if the price of services and goods increase. If people do not earn more over time, then people have to lower the standard of living.
LEARN MORE
If you’re interested in learning more about this topic, we recommend you to also take a look at the following questions:
Definition of inflation: brainly.com/question/12107185
Command economy: brainly.com/question/10877298
KEYWORD: inflation, demand pull, cost push
Subject: English
Class: College
Subchapter: Inflation
