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Monetary inflation is a sustained increase in the money supply of a country (or currency area). Depending on many factors, especially public expectations, the fundamental state and development of the economy, and the transmission mechanism, it is likely to result in price inflation, which is usually just called "inflation", which is a rise in the general level of prices of goods and services.
The Lucas islands model is an economic model of the link between money supply and price and output changes in a simplified economy using rational expectations.It delivered a new classical explanation of the Phillips curve relationship between unemployment and inflation.
Neo-Keynesian theory distinguished two distinct kinds of inflation: demand-pull (caused by shifts of the aggregate demand curve) and cost-push (caused by shifts of the aggregate supply curve). Stagflation, in this view, is caused by cost-push inflation. Cost-push inflation occurs when some force or condition increases the costs of production.
The national consumer price index rose 6.2 percent from October 2020 to October 2021. That's the largest 12-month increase since 1990, according to the Bureau of Labor Statistics.
Inflation can lead to massive demonstrations and revolutions. For example, inflation and in particular food inflation is considered one of the main reasons that caused the 2010–2011 Tunisian revolution [113] and the 2011 Egyptian revolution, [114] according to many observers including Robert Zoellick, [115] president of the World Bank.
Trend of monthly inflation rate in Italy, from 1962 to February 2022. In macroeconomics, a wage-price spiral (also called a wage/price spiral or price/wage spiral) is a proposed explanation for inflation, in which wage increases cause price increases which in turn cause wage increases, in a positive feedback loop. [1]
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Demand-pull inflation is in contrast with cost-push inflation, when price and wage increases are being transmitted from one sector to another. However, these can be considered as different aspects of an overall inflationary process—demand-pull inflation explains how price inflation starts, and cost-push inflation demonstrates why inflation ...