Management Notes

Reference Notes for Management

Cost Push Inflation – Types of Inflation | Macroeconomics

Cost Push Inflation

Cost Push Inflation

Cost Push Inflation is a type of inflation that occurs when aggregate demand remains constant but there is a decline in aggregate supply due to external factors that cause rise in price levels. An increase in labor and materials costs throughout the supply chain causes cost-push inflation. When this happens, the price of goods and services will increase, resulting in a decrease in supply. In contrast, demand-pull inflation occurs when prices rise simply because of a rise in demand.

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