Inflation
Demand-pull
cost-push
increase in AD
expansionary demand-side policy
inflationary expectations
increase in the prices of the factors of productions
increase in wages
increase in business taxes
increase in price of imported components or raw materials
consequences
decrease in consumer purchasing powers
shoe leather costs
worsen international competitevenes
uncertaintity
redistribution effect
people who receive fixed incomes - worse-off
people who receive incomes that increases at lower rate than inflation - worse-off
people who keep their savings in money assets - worse off
lenders - worse-off
borrowers - better-off
Government policies
contractionary economic policy
suply-side policies might be used to deal with both types of inflation
contractionary monetary policies
rising interest rates
decrease supply of money
decrease consumption spending and decrease investment spendig
decrease the inflationary pressure in the long-run