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Inflation:: Demand-Pull AND Cost-Push

Inflation is the rise in prices of goods and services, requiring more money to purchase the same items. There are two types of inflation: demand-pull, caused by increased aggregate demand, and cost-push, caused by rising costs of production. Both types lead to higher price levels but stem from different causes.

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Christine Joy Marcel
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153 views13 pages

Inflation:: Demand-Pull AND Cost-Push

Inflation is the rise in prices of goods and services, requiring more money to purchase the same items. There are two types of inflation: demand-pull, caused by increased aggregate demand, and cost-push, caused by rising costs of production. Both types lead to higher price levels but stem from different causes.

Uploaded by

Christine Joy Marcel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

INFLATION:

DEMAND-PULL
AND
COST-PUSH
Reporter: Vanessa Ericka A. Lara
BSED-III
What is Inflation?

The increase in the amount of


money necessary to obtain the
same amount of product or
service before the inflated price
was present.
Inflation refers to the rise in the prices of most
goods and services of daily or common use.
The two (2) types of Inflation

1. Demand Pull Inflation

2. Cost-Push Inflation
What’s the difference?
The difference between these two types
of inflation is found in their types of
inflation is found in their causes.

Both have the same effects (increasing


price level), but they are(increasing price
level), but they are cause d by different
things cause d by different things.
Basic Terms:
Aggregate demand
is the total volume of goods and
services demanded by the country.

Aggregate supply
Is the total volume of goods and
services produced by an economy
of a country at a given price level.
Demand-Pull Inflation
Demand–pull inflation occurs when the
level of aggregate demand increases
faster than the underlying level of supply.

“too much money chasing too few


goods”
Demand-Pull Inflation Curve

When there is a right war shift in the demand


curve, we can say that it is a demand-pull inflation
Factors for Increase in Demand

Increase in Reduction in Repayment of


Money Supply Taxes Past
Internal Debt
Increase in Increase in Depreciation of
Exports Income Local exchange
rates
Cost-Push Inflation
Demand–pull inflation occurs when the
level of aggregate demand increases
faster than the underlying level of supply.

“too much money chasing too few


goods”
Cost-Push Inflation Curve

When there is a shift in the supply curve


backwards, we say that inflation is a cost-push
Factors for Increase in Cost

Increase in Increase Increase in rent,


Cost of raw in Taxes wages, and bills
materials

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