Markdown
Types of Inflation - Markdown
Inflation is an economic phenomenon where the general price level of goods and services rises continuously over time. It is primarily classified into two types: demand-pull inflation and cost-push inflation. Demand-pull inflation occurs when aggregate demand exceeds aggregate supply, while cost-push inflation arises when short-run aggregate supply decreases due to rising production costs. Understanding these types is crucial for policymakers to implement effective inflation control measures and maintain economic stability.
inflation
demand-pull
cost-push
economics
price increase
supply and demand
macroeconomics
| code | slug | name | description | causes | characteristics |
| --- | --- | --- | --- | --- | --- |
| 01 | demand-pull-inflation | Demand-Pull Inflation | Inflation that occurs when aggregate demand exceeds aggregate supply. | ["Increased consumer spending","Expansion of government spending","Investment surge","Export growth","Monetary easing policy"] | ["Demand-driven","Accompanied by economic growth","Tendency toward employment improvement","Can worsen due to supply constraints"] |
| 02 | cost-push-inflation | Cost-Push Inflation | Inflation that occurs due to rising costs of production. | ["Wage increases","Surging oil and energy prices","Rising raw material costs","Exchange rate depreciation","Cost increases from tighter regulations"] | ["Supply-side factors","Not accompanied by economic growth","Decline in real wages","Risk of stagflation"] |
| 03 | built-in-inflation | Built-In Inflation | Inflation where past inflation expectations are reflected in current wage and price setting. | ["Entrenched inflation expectations","Adaptive expectations","Wage-price spiral","Increasing index-linked contracts"] | ["Self-reinforcing","Expectations-driven","Difficult to control","Spiraling vicious cycle"] |