Skip to main content
Back

Demand-Pull and Cost-Push Inflation definitions

Control buttons has been changed to "navigation" mode.
1/15
  • Demand-Pull Inflation
    A rise in prices caused by increased spending when supply cannot expand, resulting in higher prices without increased output.
  • Cost-Push Inflation
    A rise in prices triggered by higher production expenses, leading to reduced profits, lower output, and fewer producers.
  • Equilibrium Price
    The market price where quantity demanded equals quantity supplied, shifting upward during inflationary pressures.
  • Supply Shock
    An unexpected event causing a sudden decrease in supply, often due to increased input costs, resulting in higher prices.
  • Quantity Supplied
    The amount of goods producers are willing to sell at a given price, which may remain fixed during demand-pull inflation.
  • Quantity Demanded
    The amount of goods consumers are willing to buy at a given price, which increases during demand-pull inflation.
  • Production Costs
    Expenses incurred by firms to create goods, which, when rising, can reduce profits and trigger cost-push inflation.
  • Profit
    The financial gain for firms after covering costs, which declines when production costs rise, possibly causing firms to exit the market.
  • Output
    The total quantity of goods produced, which may decrease when firms face higher costs and lower profits.
  • Market Graph
    A visual representation of supply and demand curves, used to illustrate shifts leading to inflation.
  • Price Level
    The average of current prices across the entire economy, which rises during both demand-pull and cost-push inflation.
  • Supply Curve
    A graphical line showing the relationship between price and quantity supplied, shifting left during cost-push inflation.
  • Demand Curve
    A graphical line showing the relationship between price and quantity demanded, shifting right during demand-pull inflation.
  • Inflation
    A general increase in prices across the economy, resulting from either heightened demand or increased production costs.
  • Raw Materials
    Basic inputs used in production, whose price increases can trigger supply shocks and cost-push inflation.