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3 years ago

How does demand pull inflation differ from cost push inflation ?

Social Studies

2 answers:

Alexandra [31]3 years ago

7 0

Inflation is an increase in the general price level of goods and services.

Demand pull inflation can be defined as a rise or increase in the total demand for goods and services. For example: an increase in the price of gasoline would cause the price of other goods to rise because gasoline is been used to transport the goods.

On the other hand, Cost push inflation can be defined as a rise in factors of production. For example: higher taxes, higher cost of raw materials, a rise in the price of gasoline etc.

geniusboy [140]3 years ago

6 0

On the other hand the cost push inflation is one where price level increases due to the increase in the price of inputs like increase in wages and raw materials. the increase in price of inputs decreases the short run aggregate supply which increases the price level.

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