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Question
Explain Demand-pull and Cost-push inflation.
Solution
1. Demand-Pull Inflation:
Demand and supply play a crucial role in deciding the inflation levels in society at all points in time. For instance, if the demand is high for a product and supply is low, the price of the products increases.
2. Cost-Push Inflation:
When the cost of raw materials and other inputs rises inflation results. An increase in wages paid to labour also leads to inflation.
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