Inflation deflation
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Cost-push inflation is caused by increases in the prices of raw materials, wages, and taxes which increase the costs of production. This occurs due to factors like energy crises, a rising population, decreases in supply, monopolies, natural disasters, outdated production methods, and indirect taxes imposed by the government. A fall in the exchange rate can also cause cost-push inflation by increasing the prices of imported goods.
Inflation deflation
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- 7. Energy crises Increase in population Decrease in supply Marketing and new technology Customs and traditions Backward mean of production 7
- 8. A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials. 8
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- 10. Monopoly Natural disasters Shortage of resources Component costs increase in the prices of raw material (natural resources). Rising labor costs creating labor shortages Higher indirect taxes imposed by the government a rise in the duty on alcohol, cigarettes and petrol/diesel. 10
- 11. A fall in the exchange rate this can cause cost push inflation because it normally leads to an increase in the prices of imported products. Loose Govt. control Surplus Employment. Imports 11
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