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Types of Inflation - XML

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

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<items>
  <item>
    <code>01</code>
    <slug>demand-pull-inflation</slug>
    <name>Demand-Pull Inflation</name>
    <description>Inflation that occurs when aggregate demand exceeds aggregate supply.</description>
    <causes>[&quot;Increased consumer spending&quot;,&quot;Expansion of government spending&quot;,&quot;Investment surge&quot;,&quot;Export growth&quot;,&quot;Monetary easing policy&quot;]</causes>
    <characteristics>[&quot;Demand-driven&quot;,&quot;Accompanied by economic growth&quot;,&quot;Tendency toward employment improvement&quot;,&quot;Can worsen due to supply constraints&quot;]</characteristics>
  </item>
  <item>
    <code>02</code>
    <slug>cost-push-inflation</slug>
    <name>Cost-Push Inflation</name>
    <description>Inflation that occurs due to rising costs of production.</description>
    <causes>[&quot;Wage increases&quot;,&quot;Surging oil and energy prices&quot;,&quot;Rising raw material costs&quot;,&quot;Exchange rate depreciation&quot;,&quot;Cost increases from tighter regulations&quot;]</causes>
    <characteristics>[&quot;Supply-side factors&quot;,&quot;Not accompanied by economic growth&quot;,&quot;Decline in real wages&quot;,&quot;Risk of stagflation&quot;]</characteristics>
  </item>
  <item>
    <code>03</code>
    <slug>built-in-inflation</slug>
    <name>Built-In Inflation</name>
    <description>Inflation where past inflation expectations are reflected in current wage and price setting.</description>
    <causes>[&quot;Entrenched inflation expectations&quot;,&quot;Adaptive expectations&quot;,&quot;Wage-price spiral&quot;,&quot;Increasing index-linked contracts&quot;]</causes>
    <characteristics>[&quot;Self-reinforcing&quot;,&quot;Expectations-driven&quot;,&quot;Difficult to control&quot;,&quot;Spiraling vicious cycle&quot;]</characteristics>
  </item>
</items>