How does demand pull inflation differ from cost push inflation

2 answers:

5 0

During demand pull inflation, cost doesn't play major role, here the main factor is demand, while in cost push inflation cost play major role, here demand is created by adjusting the coi.

VladimirAG [237]4 years ago

4 0

Answer:

Demand-pull inflation is the result of consumer behavior. On the other hand, cost-push inflation is a result of the behavior of producers.

Explanation:

Demand-pull inflation occurs when the aggregate demand for a product becomes greater than the aggregate supply. As a result, inflation related to this product increases as unemployment and GDP fall. As a result, consumers have more money and are willing to establish greater demand for a product, however, producers of that product are unable to keep up with this demand and the supply turns out to be small.

Cost-push inflation, on the other hand, occurs as a result of increased production costs for a product. In this situation, the demand may even remain stable, but producers end up having to increase the unit price of the product, so that its sale covers production costs.

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