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Topic: Business
Number of pages / Number of words: 8 / 2101
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Inflation often follows a war, when government has to spent large sums on military equipment and has not raised enough taxes to pay for it.

*Monetary inflation - quantity theory

By Monetarism, inflation is an effect of the supply of money being larger than the demand for money.

(http://en.wikipedia...


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This has a direct impact on inflation by raising aggregate demand. The more inelastic is aggregate supply in the economy, the greater the impact on inflation. If both happen together the inflation is even worse. If the inflation is caused by an increase in demand, then it is known as demand-pull inflation...


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