What are three causes of inflation?

Answer 1

Producers raise prices to meet increased costs, which causes costs to consumers to rise.

Answer 2

give me the right answer of "causes of inflation"

The above remark does not answer the question. One way to create inflation is a method of borrowing done by governments. A government borrows funds on a long term basis from the World Bank, for example. The government now has funds to use for welfare payments. The welfare system now can use these funds to increase consumer spending with monies that have not been earned. The monies to pay for consumer goods, places a demand on the producers who now produce more products to meet anticipated demand. The end result is an increase in the money supply. The government has "created" funds based on a promise to repay the World Bank.

Answer 3

There are several reasons for inflation. One reason is war. War creates huge amounts of spending relative to domestic economy capacity on behalf of the government to prepare and partake in war. With the huge increase in demand and sales, firms will increase their prices therefore increasing inflation. Another reason for inflation is an increase in price of a vital input that affects a large proportion of the economy. In the recent decades this input was oil. As the price of oil skyrocketed, so did inflation as all aspects of the economy had to adjust to the input that was vital to every transaction. This is called an inflation shock. There is also the smaller effects of normal inflation year to year based on the CPI, which most experts say is a function of a normal economy.

Answer 4

There are many causes for inflation, depending on a number of factors. For example, inflation can happen when governments print an excess of money to deal with a crisis. As a result, prices end up rising at an extremely high speed to keep up with the currency surplus. This is called the demand-pull, in which prices are forced upwards because of a high demand.

Another common cause of inflation is a rise in production costs, which leads to an increase in the price of the final product. For example, if raw materials increase in price, this leads to the cost of production increasing, which in turn leads to the company increasing prices to maintain steady profits. Rising labor costs can also lead to inflation. As workers demand wage increases, companies usually chose to pass on those costs to their customers.

Inflation can also be caused by international lending and national debts. As nations borrow money, they have to deal with interests, which in the end cause prices to rise as a way of keeping up with their debts. A deep drop of the exchange rate can also result in inflation, as governments will have to deal with differences in the import/export level.

Answer 5

Inflation is rising prices. There are many factors which cause prices to rise, and each factor may affect other factors, so the whole matter is quite complicated and no-one has been able to identify one single cause of inflation.

Some factors:

Increasing cost of production, e.g. materials, energy, labour, transport

Government legislation, e.g. greater health and safety controls, taxation.

Greater financial costs, e.g. bank interest, adverse exchange rates, import/export tariffs.

Increased disposable income, i.e. customers having more 'discretionary' spending power and are thus prepared to pay more.

Reduction of key resources e.g. if there is a crop failure, prices of that crop will rise as suppliers have less to sell but must charge more in order to stay in business.

These are just a few examples.

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Strictly speaking the above is not entirely true.

Strictly speaking inflation is a national currency becoming worth less when compared in value to goods and services.

But what actually causes this to happen ?

Free advise if you want to survive 2011 :

Inflation, with the possible exception of rising oil prices (if you want to call that part of inflation), is really a hidden tax and not a natural phenomenon. It is the constant DEVALUATION of national currencies by well established banking cartels which leverage control over national governments. This gives the false appearance of goods being more expensive because the currency is worth less goods. Even goods in no way related to oil prices. ONE of their methods of devaluing currencies is by creating over supply of currency by overprinting notes (a.k.a. toilet paper). If this form of inflation (which is not oil related) really was a natural phenomenon like we get told, we would also have just as much deflation - as per the law of averages. We do not.

The bankers further financially enslave us with their economist's jargon WHICH DOES NOT VARY THAT MUCH FROM ECONOMIST TO ECONOMIST. They tell us that they are unfortunately forced to lift interest rates to help "curb" the very inflation that they cause in the first place. They therefore get even more hidden tax from us. When the golden goose is almost dead, they quickly tell us that all those interest rate increases have started working and now inflation is under control, which it very well might be - SO WHAT ! So they then lower interest rates. Just as the golden goose starts laying more golden eggs again and starts recovering from their exploitation they then start the whole process again of causing inflation (tax) to go higher and higher until once again they have to lift interest rates. So we are caught in the trap going back and forth between high interest rates and inflation - BOTH JUST HIDDEN TAXES AND GIANT SCAMS OF THE BANKS.

Stop using their paper money as much as possible and trade with anything else you can lay your hands on that isn't (toilet) paper money. We should encourage people to invest in gold and silver coins that aren't subject to inflation. Trading in silver coins on a day to day basis would be even better, but not many traders accept silver coins. Even if saving for only a few years Krugerrands wont experience inflation.

Inflation from oil seems to be caused in a similar way. Many not fooled by their Propaganda have suggested that crude oil is not nearly running out geologically according to some studies, but simply that the supply is controlled by the miners (OPEC) and the refiners (middle men/oil companies, eg. BP, Shell, etc). This artificial limiting of the supply pushes up prices because the demand is still the same or higher. The inflated oil prices pushes up petrol and diesel, which in turn pushes up food prices and that of other goods that need to be transported. The answer for petrol car users - go electric. The answer for food prices - wait for supermarkets to go electric. Food price increases due to global warming's climatic conditions destroying crops is only a part of the story. Don't be fooled!

Currency inflation cause by banking manipulations are just as bad as oil manipulations and we should stop using their paper money and trade with anything else you can lay your hands on that isn't (toilet) paper money. The last thing we should be encouraging out children to do is save paper money in the bank. Teach them to rather purchase Krugerrands.

Politics is controlled by economics (money). Money drives the media, money drives politics, people are influenced by the media, and we have modern democracy. High interest rates are not the only way to reduce inflation because inflation is not a natural phenomenon. Inflation is not caused by too much economic growth, etc, etc, like we get told. How can economic growth cause your money to be worth less ?

Economic growth just makes inflation less noticeable because you don't realise that much when your money becomes worthless while business grows. The bankers cause high inflation during these times of economic growth, then say they will have to lift interest rates to curb the economic growth which is accompanied by inflation but does not cause it. If you continue believing the status quo, you will continue to get poorer. Raw materials and metals, hard assets cannot be manipulated by the paper money printing press. It cannot be manipulated by banking manipulations. Force banks to charge fair interest rates (eg. 1% or less), stop them from to lending to those who can't afford loans, monitor the amount of paper money they print and force them to back them up with metals to control inflation. Then there will be no "housing bubbles" or need to control inflation.

Answer 6

It depends on who you ask, for it is very controversial. Some economists will say that inflation happens because of too much spending and not enough good. This causes the prices of goods to be "bid up" and is called demand-pull inflation. Another cause is called "cost-push inflation". This is when the cost of production goes up, causing producers to raise their prices. The reason for the sudden cost increase is usually a supply shock in a commodity. This has happened repeatedly with oil.

Answer 7

Inflation is the rising cost of goods. It can be caused by limited supply and greater demand, but is generally a result of an increase in the money supply.

Answer 8

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