Question
Demand-pull inflation and Cost-push inflation Demand-pull inflation and Cost-push inflation
Answer :
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The difference between these two types of inflation is found in their causes. Both have the same effects, but they are caused by different things.
Demand-pull inflation is caused by excess demand. When the people as a whole get more money they are able to pay more for goods and services (unless more goods and services are produced). Economists talk about more money "chasing" the same amount of goods and services. This causes shortages and prices rise.
Cost-push inflation is caused by disruptions in supply. These disruptions cause increases
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