Discuss 2 causes of inflation. Make it short

Answer 1

1. Demand-pull inflation: This occurs when the demand for goods and services exceeds their supply, leading to a rise in prices. Factors such as strong consumer confidence, low unemployment, and increased government spending can all contribute to demand-pull inflation.

2. Cost-push inflation: This type of inflation occurs when the costs of production for businesses increase, leading them to raise prices to protect their profit margins. Factors such as rising wages, increased raw material costs, and higher energy prices can all trigger cost-push inflation.