Causes of Inflation in Economics

Causes of Inflation in Economics

Inflation occurs when the prices of goods and services increase in an economy. The ability of a currency to purchase the same quantity of goods decreases its value during periods of inflation. Inflation is triggered by a variety of factors.

Causes of inflation in Economics

  1. Cost-Push inflation

  2. Demand-pull inflation

  3. Printing Money

  4. Public Spending

  5. Velocity of Circulation

  6. Population

  7. Hoarding

  8. Shortage

  9. Exports

  10. Trade Union

  11. Devaluation

  12. Tax Reduction

People are more likely to make use of their assets once the state reduces taxes. Additionally, increased demand for goods and services results from lower taxes; However, inflation occurs when the production rate cannot keep up with demand.


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