ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -There are two types of inflation which arise either based on the demand side or price of inputs in the economy. The demand side factors result in formation of demand pull inflation and the supply side factors result in cost push inflation.

Detailed explanation-2: -Economists distinguish between two types of inflation: Demand-Pull Inflation and Cost-Push Inflation. Both types of inflation cause an increase in the overall price level within an economy.

Detailed explanation-3: -Demand-pull Inflation As demand increases, supply remains constant, pulling the prices for goods and services up.

Detailed explanation-4: -Based on speed, there are 4 different types of inflation – hyperinflation, galloping, walking, and creeping.

Detailed explanation-5: -Cost-push inflation (also known as wage-push inflation) occurs when overall prices increase (inflation) due to increases in the cost of wages and raw materials. Higher costs of production can decrease the aggregate supply (the amount of total production) in the economy.