What Causes Inflation? The Main Explanations
When demand grows while the economy is already near its limit, the only thing that can rise is the price (OpenStax).
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1.What is demand-pull inflation?
When demand grows while the economy is already near its limit, the only thing that can rise is the price (OpenStax).
2.What is cost-push inflation?
Leo's flour, energy and wages cost more, so he must charge more to keep his shop open; scale that to most firms in a country.
3.What happened to oil prices after the 1973 embargo, per the Fed?
Around the Iranian revolution of 1979, oil costs roughly tripled again.
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Sources (5)
- The Great Inflation (Federal Reserve History, Federal Reserve Board)
- Principles of Economics 3e, 24.5 How the AD/AS Model Incorporates Growth, Unemployment, and Inflation (OpenStax)
- Friedman, "The Counter-Revolution in Monetary Theory" (Wincott Memorial Lecture, 1970), Zitat nach Sekundaerquellen
- FEDS Notes / FEDS Working Papers (Federal Reserve Board): "Why Do We Think That Inflation Expectations Matter for Inflation? (And Should We?)" (Rudd, 2021)
- Eigene Zuordnungsaufgabe: vier erfundene Szenarien (synthetisch)
Education only. Not financial advice.