What causes inflation? The two generally accepted causes on inflation are: 1. High demand, low supply - If demand is growing faster than the supply of products and services, prices are forced upwards. Also known as demand-pull inflation, this normally occurs in growing economies when there is "too much money chasing too few goods". 2. Rise in production costs - When the price of raw material goes up, production cost will rise, which leads to companies increasing prices to maintain their profit margins. This also applies when employees demand higher wages as companies usually pass on these costs to the consumers.
Posted on: Thu, 27 Jun 2013 07:11:10 +0000
Trending Topics
Recently Viewed Topics
© 2015