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Demand Pull and Cost Push Inflation

Differentiate between demand pull and cost push inflation. 

Demand Pull Inflation

If prices rise continuously due to rise in demand for goods, it is called demand pull inflation. Demand may rise due to rapid increase in population, change in the taste of the people, change in fashion or decrease in the production of goods etc.

Cost Push Inflation

If price rise continuously due to rise in cost of production, then it is called cost push inflation. Cost of production may rise due to rise in the price of raw material and rise in wages etc.

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