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Push And Pull Inflation

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as we know that Inflation is the continuous rise in the price of goods and services. Inflation has been in action in every government, thirty years ago a car could cost a person R500 in South Africa but now prices has gone crazy. Currently to get a brand new car it can cost you more than R 200 000, this shows us a huge increase in prices when years past. The concept of inflation has played a significant role in the way of thinking for monetary policymakers in past years. However even now there are still some confusions on how to measure inflation, and what causes inflation. This assignment deals with the concepts related to inflation and its causes. I will first go in details describing inflation as it is and explain what normally cause inflation. …show more content…

Economists differentiate between many types of inflation: Demand-Pull Inflation and Cost-Push Inflation. Both types of inflation cause an increase in the overall price level within an economy. The demand-pull inflation is when there is a rapid aggregate demand for goods and services, than rapid increase in the amount of money in the economy. Cost Push inflation is happens when there is a rapid increase wages of workers and prices of material used on production. Rising house money can cause inflation and printing more money, 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. Natural disasters they can cause it …show more content…

This shows us on average Education is getting expensive. In South Africa they are trying to increase the purchasing power of Rands against other currency, that’s the reason cost of living is getting too high. The government increases taxes and prices of food are going up. There is high pregnancy in the country which lead to rapid economic growth. Prices of petrol is going up and down, now we have to import most of our resource for foreign country which those not help because we support other country’s economy to grow instead of ours. The government is giving pupils free education and most of the students don’t use the opportunity which increases high level of unskilled people and unemployment.

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