How does the demand fueled inflation differ from the cost fueled inflation? How can they be controlled? -04
Need 4 mark answer
Answers
Answered by
4
Answer:
Cost-push inflation is the decrease in the aggregate supply of goods and services stemming from an increase in the cost of production. ... Demand-pull inflation can be caused by an expanding economy, increased government spending, or overseas growth.
Answered by
0
In demand fueled, as price increases so does wage rate, whereas in cost as wage rate increases so the price.
- The gradual rise in price level leads to a marked escalation in wage rate in event of demand inflation. Whereas, in the former one, a rise in wage rate leads to an escalation in cost level.
- As time gap between a price rise and a salary raise is less than a year, and index numbers computation is restricted to yearly data, these changes are reflected by relevant index numbers, which fail to identify what leds to what.
- These can be controlled as -
- Implementation of strict monetary policy.
- Implementation of effective fiscal policy.
- Boosting the interest rate
- Reducing government spending, or increasing the taxes
Similar questions
Physics,
10 days ago
English,
10 days ago
World Languages,
10 days ago
Science,
20 days ago
Business Studies,
20 days ago
Math,
8 months ago
Social Sciences,
8 months ago
Math,
8 months ago