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Types of Inflation:
1)Demand Pull (Demand Inflation):
* Occurs when there is too much spending in the economy. Sometimes described as 'too many dollars chasing too few goods'. When the amounts of money buyers of G&S want to spend increases more rapidly than the supply of G&S, then prices will be bid or 'pulled' upwards. Demand Inflation is more likely to occur when the economy is close to full employment, when pressure on resources allows their price to be bid upwards (demand for them exceeds supply).
2)Cost Push (Cost Inflation):
* Occurs when increasing costs of p…
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