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Causes of Inflation Influences

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What are some causes for inflation? What are some of the cost and how do expectations inluence the effects of inflation.

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-Inflation
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What are some causes for inflation? What are some of the cost and how do expectations influence the effects of inflation.

Ans:
Inflation is defined as a sustained increase in the general level of prices for goods and services. It is measured as an annual percentage increase. As inflation rises, every dollar you own buys a smaller percentage of a good or service. Generally there are two widely accepted theories of inflation which explain the causes. They are demand pull inflation & cost push inflation.

Demand- pull inflation:

According to this theory, inflation arises as "too much money chases too few goods". The inflation resulting from an increase in aggregate demand is called demand-pull inflation. Such inflation may arise from any individual factor ...

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