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More people with money equals more goods and services wanted.Firms will try and hire more people to keep up with demand.If you really want the accurate answer to those questions, you must first gain an understanding of demand-pull inflation and cost-push inflation.First, let's recap what inflation is to help clarify our understanding of this topic.For example, when many individuals are trying to purchase a new gaming system or a new smartphone that is limited in quantity, the price will usually rise.When this happens across the entire economy for many different goods and services, demand-pull inflation can result.
To summarize, inflation can result for several different reasons and have several different root causes.
Try it risk-free Why does the cost of milk and eggs keeping going up year after year?
Why does the same model vehicle you purchased last year now cost 0 more?
Cost-push inflation is a result of increased production costs, such as wages and raw materials and decreased aggregate supply.
As demand for goods remains consistent, prices are pushed up and often passed along to the consumer.