We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

Definition of Cost-Push Inflation Essay Sample

essay
The whole doc is available only for registered users OPEN DOC

A limited time offer!

Get a custom sample essay written according to your requirements urgent 3h delivery guaranteed

Order Now

Definition of Cost-Push Inflation Essay Sample

The text “Economics” (2nd Edition) by Parkin and Bade gives the following explanation for cost-push inflation: “Inflation can result from a decrease in aggregate supply. The two main sources of decrease in aggregate supply are: •An increase in wage rates

•An increase in the prices of raw materials
These sources of a decrease in aggregate supply operate by increasing costs, and the resulting inflation is called cost-push inflation. Other things remaining the same, the higher the cost of production, the smaller is the amount produced. At a given price level, rising wage rates or rising prices of raw materials such as oil lead firms to decrease the quantity of labor employed and to cut production.” (pg. 865)

Investopedia explains ‘Cost-Push Inflation’
Cost-push inflation develops because the higher costs of production decrease aggregate supply (the amount of total production) in the economy. Because there are fewer goods being produced (supply weakens) and demand for these goods remains consistent, the prices of finished goods increase (inflation). InvestorWords.com

In general, there are three factors that could contribute to cost-push inflation: rising wages, increases in corporate taxes, and imported inflation (when imported raw or partly-finished goods become more expensive, often as a result of currency depreciation). Definition of ‘Structural Change’

An economic condition that occurs when an industry or market changes how it functions or operates.

Aggregate supply – aggregate demand model illustration of aggregate supply (AS) shifting to AS’ and causing price level to increase while output shrinks.

We can write a custom essay

According to Your Specific Requirements

Order an essay
Get Access To The Full Essay
icon
300+
Materials Daily
icon
100,000+ Subjects
2000+ Topics
icon
Free Plagiarism
Checker
icon
All Materials
are Cataloged Well

Sorry, but copying text is forbidden on this website. If you need this or any other sample, we can send it to you via email.

By clicking "SEND", you agree to our terms of service and privacy policy. We'll occasionally send you account related and promo emails.
Sorry, but only registered users have full access

How about getting this access
immediately?

Become a member

Your Answer Is Very Helpful For Us
Thank You A Lot!

logo

Emma Taylor

online

Hi there!
Would you like to get such a paper?
How about getting a customized one?

Can't find What you were Looking for?

Get access to our huge, continuously updated knowledge base

The next update will be in:
14 : 59 : 59
Become a Member