1. Krugman Section 6 Module 33
Inflation Types
Krugman Section 6 Module 33

2. Inflation:
A general rising of the level of prices (not all P rise at the same rate)

3. Causes of Inflation Demand-Pull inflation
Spending increases faster than production
Too much money chasing too few goods
Too many consumers with ready cash or expectations for spending
Too many are employed causing wage inflation

4. Cost-Push or Supply-Side Inflation
Prices rise because of input prices increase
Not enough supply of goods & services
Wage-push can occur as result of union strength
Supply shocks may occur with unexpected increases in the price of raw materials
Could cause both output and employment to decline—real income declines.