Differentiate between:i) Demand pull and cost push inflationii)

Question

Differentiate between:

i) Demand pull and cost push inflation
ii) Nominal and real exchange rate

06 Jul 2022

Answer :

Word Count : 444

i) Demand pull and cost push inflation

Cost-push inflation is the decrease in the aggregate supply of goods and services stemming from an increase in the cost of production.

Demand-pull inflation is the increase in aggregate demand, categorized by the four sections of the macro economy: households, business, governments, and foreign buyers.

An increase in the costs of raw materials or labor can contribute to cost-pull inflation.

Demand-pull inflation can be caused by an expanding economy, increased government spending, or overseas growth.

Cost-push Inflation—Cost-push inflation occurs when rise ____ _______ ___ ____ ________.
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