What is inflation?
Inflation is when there is a decrease in the value of money and an increase in the price of products. You certainly must have heard about the times when you could buy a whole lunch for ₹10 and right now a good lunch costs around ₹1000.
So what happened?
Well inflation happened. When there is more money in circulation, there will be people who want to buy something. But when there is more demand and less supply, everything runs out. To counter high demand the prices rice and so there is a increase in price and a drop in the value of money.
Causes of Inflations
There are two reasons why inflation happens
- Demand Push
- Cost push
Cost push:
Cost push happens when there is more demand for products and so the sellers are forced to increase the prices.
Demand push:
Demand push happens when the sellers don’t get enough supply to make their products hence forcedt o increase prices.