Skillsfirst Level 3 Certificate in Introduction to Financial Trading (RQF) - UNIT 1: Principles of financial trading
Skillsfirst Level 3 Certificate in Introduction to Financial Trading (RQF) - UNIT 2: Principles of Financial Planning and Cash Flow in Financial Trading
Skillsfirst Level 3 Certificate in Introduction to Financial Trading (RQF) - UNIT 3: Understanding financial trading techniques

CAUSES OF INFLATION

Inflation has many different schools of thought as to why inflation changes but the two main concepts are described below.

Demand-pull

This is described as too much money chasing too few goods in that there is not enough supply of something but plenty of money about to purchase them.

Cost-push

An increase in costs not matched by similar higher production. Factors that produce increased costs include:

  • Imported raw materials
  • Domestic costs
  • Poor productivity

The diagram below shows what happens in both examples above, and how demand and supply affect the prices of goods.

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