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Principal Causes of Inflation

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What are the causes of inflation? Discuss how they contribute to inflation of prices.

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Solution Summary

Lists 4 principal causes of inflation in 181 words of explanation.

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The principal causes of inflation are:

- Excessive demand - 'too much money chasing too few goods'. If demand is growing faster than the level of supply, then prices will increase. The costs of inflation include:

- Uncertainty - if inflation keeps varying, then firms may ...

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