What are the main causes of inflation? WAGI☒ INCREASE Credit boom Higher wage costs Energy Price Increased energy bills Falling exchange rate
What are the main causes of inflation?
Inflationccanaariser frominternal and external events Some inflationary pressures come from the domestic economy,for example the decisions of utility businesses providing electricity or gas or water on their tariffs/pricelists for the year ahead,or the pricing strategies of the food retailers based on the strength of demand and competitive pressure in their markets. A rise in the rate of VAT would also be a cause of increased domestic inflation in the short term because it increases a firm's production costs
Some inflationary pressures come from the domestic economy, for example the decisions of utility businesses providing electricity or gas or water on their tariffs/pricelists for the year ahead, or the pricing strategies of the food retailers based on the strength of demand and competitive pressure in their markets. A rise in the rate of VAT would also be a cause of increased domestic inflation in the short term because it increases a firm's production costs. Inflation can arise from internal and external events
Inflation can also come from external sources,for example a sustained rise in the price of crude oil or other imported commodities,foodstuffs and beverages. Fluctuations in the exchange rate can also affect inflation for example a fall in the value of the RMB against other currencies might cause higher import prices for items such as automobiles from Germany or technology supplies from the United States which feeds through directly or indirectly into the consumer price index
Inflation can also come from external sources, for example a sustained rise in the price of crude oil or other imported commodities, foodstuffs and beverages. Fluctuations in the exchange rate can also affect inflation – for example a fall in the value of the RMB against other currencies might cause higher import prices for items such as automobiles from Germany or technology supplies from the United States – which feeds through directly or indirectly into the consumer price index
Main Causes ofiinflation 1.Inflation related to money supply If the Central Bank prints more money,you would expect to see a rise in inflation.This is because the money supply plays an important role in determining prices.If there is more money chasing the same amount of goods,then prices will rise. Hyperinflation is usually caused by an extreme increase in the money supply
1.Inflation related to money supply If the Central Bank prints more money, you would expect to see a rise in inflation. This is because the money supply plays an important role in determining prices. If there is more money chasing the same amount of goods, then prices will rise. Hyperinflation is usually caused by an extreme increase in the money supply. Main Causes of inflation
When would an increase in the money supply not result in an increase in inflation? The basic answer is that it depends on factors such as the velocity of circulation (number of times money changes hands),the state of the economy and the growth in productive capacity (the Long Run Aggregate Supply LRAS)
When would an increase in the money supply not result in an increase in inflation? The basic answer is that it depends on factors such as the velocity of circulation (number of times money changes hands), the state of the economy and the growth in productive capacity (the Long Run Aggregate Supply LRAS)