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In Macroeconomics around the world, Economists have managed to identify two separate types of inflation that commonly occur. These types of inflation include cost-push inflation and demand-pull inflation. 

  • Cost-push inflation occurs as a result of rising production costs. 
  • As production costs rise, the Aggregate Supply curve shifts to the left, resulting in a higher equilibrium price of goods and services in the macroeconomy.
  • This is also known as stagflation and is the worst place for an economy to be
  • Key traits of stagflation are high unemployment and high prices
  • Demand-pull inflation occurs as a result of increased consumer demand for goods and services. 
  • As a result of increased consumer demand, the Aggregate Demand curve shifts to the right, resulting in a higher equilibrium price price of goods and services in the macroeconomy.
  • Can be described as "too much money chasing too few goods"

“Demand Pull Inflation.” Intelligent Economist, 5 Aug. 2019, www.intelligenteconomist.com/demand-pull-inflation/.

Pettinger, Tejvan. “The Natural Rate of Unemployment.” Economics Help, 22 July 2017, www.economicshelp.org/macroeconomics/unemployment/natural_rate/.

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