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Inflation.

Date Submitted: 11/22/2003 17:45:25
Category: / Business & Economy / Finances and Investments
Length: 2 pages (543 words)
INFLATION Types of Inflation: 1)Demand Pull (Demand Inflation): * Occurs when there is too much spending in the economy. Sometimes described as 'too many dollars chasing too few goods'. When the amounts of money buyers of G&S want to spend increases more rapidly than the supply of G&S, then prices will be bid or 'pulled' upwards. Demand Inflation is more likely to occur when the economy is close to full employment, when …
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…has reduced purchasing power. ·Those on fixed nominal incomes where the purchasing power of their incomes will diminish with time unless they are fully indexed. ·Holders of assets held as cash, which do not increase in value as well as real assets. Eg. Savings deposits. ·Those not organised to protect their real income because they lack the market power. If inflation is anticipated, then the effects will be reduced as people may plan for it.
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