Chap 11: Inflation

Question 1

Define inflation

Answer 1

Inflation is defined as an economic situation where there is a sustainer increase in GPL in the economy

Question 2

Define demand pull inflation

Answer 2

Demand pull inflation occurs when GPL increases due to a sustained increase in AD that is not matched by the output of goods and services (AS).

Question 3

Define cost push inflation.

Answer 3

Cost push inflation occurs when GPL rise due to rising cost of production.