02/10/14 Types of Inflation

• Types of Inflation
1.  Cost- Push inflation
2. Demand pull inflation
3. Political politics
• Cost- pull inflation- higher production cost, which increases prices.
• Is usually a result, of a supply shock. 
• Increasing cost force producers to increase prices. Ex: because crops die in a storm, farmers will charge more to make up for loss.
• Demand- Pull Inflation- too many dollars chasing too few goods.
• Demand pulls up prices, therefore, you create a shortage ans an overheated economy with excessive spending, but the same amount of goods.
• Ex: Limited seats to a concert, so producers will charge more for them.
• Political Panics
• Due to depression or recession.
• How do inflation hurt or help people?
• Hurt
1. Lenders (loan money at a fixed rate.)
2. People with fixed income.
3. Savers
4. People with fixed wages.
• Help
1. Debtors