Question

two definitions of inflation. What are they? What is the difference and why is it important?

Answer 1

Demand pull inflation = It exists in the market when the demand for the goods in the market increases the supply and that leads to an increase in the price of the goods,

Cost push inflation= It happens when the cost of the goods in the market increase and that push the price of the goods up in the market.

The difference between these two is the source of the inflation, if the demand increases the inflation then its easy to manage and both FED and Fiscal policy in the market are able to manage it easily, but cost push inflation is not easily manageable and can cause mor troubles in the economy.