inflation and deflation

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  • inflation
    • causes
      • cost push
        • caused by increased cost
          • increase in the prices of raw materials
          • wage increases
          • Expectations of inflation
          • Higher indirect taxes
          • A fall in the exchange rate
          • Monopoly employers
      • demand pull
        • caused by an increase in AD
          • more government spending less tax
          • depreciation of the exchange rate
          • is experienced during boom when full employment ofresources
          • A fall in interest rates
    • how inflation is measured
      • inflation target of 2%
      • consumer price index (CPI)
  • more government spending less tax


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