DEMAND PULL INFLATION

LESLYN LACDAO

• SUSTAINED INCREASE IN THE PRICES OF GOODS AND SERVICES RESULTING FROM A HIGH DEMAND, STIMULATED BY EASY CREDIT AND HIRE PURCHASE OFFERS ACCOMPANIED BY INSUFFICIENT SUPPLIES.

• THE MOST COMMON CAUSE OF INFLATION

• PARKIN AND BADE GIVE THE FOLLOWING EXPLANATION FOR DEMAND-PULL INFLATION:

• "THE INFLATION RESULTING FROM AN INCREASE INAGGREGATE DEMAND IS CALLED DEMAND-PULL INFLATION. SUCH AN INFLATION MAY ARISE FROM ANY INDIVIDUAL FACTOR THAT INCREASES AGGREGATE DEMAND, BUT THE MAIN ONES THAT GENERATE ONGOING INCREASES IN AGGREGATE DEMAND ARE

• INCREASES IN THE MONEY SUPPLY

• INCREASES IN GOVERNMENT PURCHASES

• INCREASES IN THE PRICE LEVEL IN THE REST OF THE WORLD

WHAT CREATES DEMAND-PULL INFLATION?

• GROWING ECONOMY

• EXPECTATION OF INFLATION 

• DISCRETIONARY FISCAL POLICY

• STRONG BRAND

• TECHNOLOGICAL INNOVATION

EXAMPLE:

REFERENCES:

• HTTP://USECONOMY.ABOUT.COM/OD/INFLATIONFAQ/F/DEMAND-PULL-INFLATION.HTM

• HTTP://ECONOMICS.ABOUT.COM/CS/MONEY/A/INFLATION_TERMS.HTM

• HTTP://ANSWERS.YAHOO.COM/QUESTION/INDEX?QID=20080318155950AANRYCN