Demand & Cost-Push Inflation Flashcards
1
Q
What is Demand-Pull Inflation?
A
Demand-pull inflation is when there is an increase in aggregate demand, and the supply remains the same or decreases. When supply cannot meet growing demand, prices for goods and services are pulled higher.
2
Q
What is Cost-Push Inflation?
A
When there is a disruption in the supply of goods and services, prices are pushed higher by cost-push inflation. With less supply but unchanged or higher demand, companies raise their prices, pushing up inflation.
