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Published on Nov 23, 2015
Inflation
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WHAT IS IT?
- Is the increase in prices of goods and services overtime leading to higher prices lowering purchasing power.
CAUSES
- What causes inflation is mainly because of the ex excess aggregate demand or the economic growth too fast or cost push factors.
CREEPING OR MILD INFLATION
- Is when prices rise 3% a year or less, it sparks increased demand as consumers decide to buy. It drives to economic expansion.
WALKING INFLATION
- In this type of inlfation the prices rise between 3%-10% a year. People start to buy more that they need so they can avoid the higher prices later.
GALLOPING INFLATION
- When inflation rises 10%. The economy becomes unstable and goverment leaders lose credibility.
WAGE INFLATION
- Is when the workers' pay rises faster that the cost of living. When there is a shortage of workers and labor unions negotiate ever-higher wages or workers control their own pay.
