Distinguish between demand-pull and cost-push inflation
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BASIS FOR COMPARISON DEMAND-PULL INFLATION COST-PUSH INFLATION
Meaning When the aggregate demand increases at a faster rate than aggregate supply, it is known as demand-pull inflation. When there is an increase in the price of inputs, resulting in decrease in the supply of outputs, is is known as cost-push inflation.
Represents How price inflation begins? Why inflation is so difficult to stop, once started?
Caused by Monetary and real factors. Monopolistic groups of the society.
Policy recommendations Monetary and fiscal measures Administrative control on price rise and income policy.
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