Lesson 8-The causes of inflation Flashcards
1
Q
What are the 3 causes of inflation?
A
.Demand Pull inflation
.Cost push inflation
.Money supply
2
Q
What is demand pull inflation caused by?
A
Excess aggregate demand and the economy close to full capacity
3
Q
What is Demand pull inflation often linked to?
A
A credit boom
4
Q
What is cost-push inflation normally caused by?
A
Rising wage costs in the labour market
5
Q
What impact will cost-push inflation have on shipping from overseas?
A
Increasing raw material and component costs from domestic and overseas suppliers
6
Q
Why would there be rising import prices?
A
Due to falling exchange rates
7
Q
When does Money Supply inflation happen?
A
When governments print money to pay for goods and services
