Types of Inflation

market, Federal Reserve

The three major types of inflation are related to the ?

• this means it’s not a ? issue

demand-pull inflation

First major type of inflation

• caused by our demand for goods / services

cost-push inflation

Second major type of inflation

• caused by suppliers (difficulties / choices)

built-in inflation

Third major type of inflation

• a mix of both demand-pull inflation and cost-push inflation

  • ex. workers demand raises to deal with inflation making inflation worse…

excess, finite,

In Demand-pull inflation, ? demand for ? amount of ? leads to three different types of price levels

• too many dollars chasing too few goods

low output, recessionary, not maximized, unemployment, increases, prices

Stage 1 of Demand-Pull inflation: ? / no inflation

• most likely in a ? period where production is ? and there’s high ?

• when demand increases, output ? without ? rising too since businesses already have the capacity to produce more

expanding output, maximized production, price, rise, diminishing marginal returns, labor

Stage 2 of Demand-Pull inflation: ?

• economy moves towards ?

• ? levels start to ? as output rises

• each worker contributes less in what we call ?

  • cost of ? begins to increase which is why cost of production increases

ceiling, maximized, demanded, available, prices

Stage 3 of Demand-Pull inflation: ?

• resources are ?, and more output is not possible

• more products ?, but they’re not ?

  • the only solution is to jack up the ?

input costs, less, shortage

Cost-push inflation typically happens when suppliers receive rising ?

• suppliers will also usually supply ? in general (a ? will drive prices up)

worse, output, maximized, diminished

Cost-push inflation is MUCH ? than demand-pull inflation

• at least in demand-pull inflation, ? was being ?

  • in cost-push inflation, output is deliberated being ? to reduce production costs

Supply Shocks

Sudden, often unexpected increases in production costs

• ex: energy crises, post 9/11, COVID-19