Economy, asked by samkhan8219, 9 months ago

Inflation theory which combines both the pull back and push back to explain the inflation

Answers

Answered by amritaraj

Answer:

Explanation:

In mainstream economics, the word “inflation” refers to a general rise in prices measured against a standard level of purchasing power. Previously the term was used to refer to an increase in the money supply, which is now referred to as expansionary monetary policy or monetary inflation. Inflation is measured by comparing two sets of goods at two points in time, and computing the increase in cost not reflected by an increase in quality. There are, therefore, many measures of inflation depending on the specific circumstances. The most well known are the CPI which measures consumer prices, and the GDP deflator, which measures inflation in the whole of the domestic economy.

Answered by gratefuljarette

The theory of inflation that combines both the pull back and push back to explain the inflation is called mixed inflation theory. It is a part of the economy which entails both the theories which work simultaneously but in an independent manner

Explanation:

The mixed inflation involves both the factors of cost push inflation and demand pull inflation in its inflationary process. There is a change in the prices of goods in the mixed economy due to the changes in aggregate demand and along with the aggregate supply.
The cost push inflation and demand pull inflation work together but in an independent manner during inflation. There are economists who believe that these two do not operate together and it could start with process of increase in demand or cost of production
The other theory of inflation is that due to cost push inflation there is a rise in prices and it leads to unemployment. But the government adopts measures of monetary and fiscal policies which increase employment and income of the people and it slowly leads to demand pull inflation