Topic – Part of static series under the heading – “Inflation”
4) Explain the difference between demand pull and cost push inflation? Discuss whether inflation is invariably bad for economy? (250 words)
Key demand of the question
The question expects us to explain the difference between cost push and demand pull inflation and do a critical analysis of the impact of inflation.
Structure of the answer
Introduction – Explain what inflation is.
Body – Explain the difference between the demand pull and cost push inflation and do a critical analysis of the impact of inflation such as decline in relative competitiveness, depreciation in Exchange Rate, socio economic impacts etc, Phillips curve etc
Conclusion – Give a fair and balanced view of the impact of inflation on economy.