I really don't understand what the types of inflation are.

It is important to understand that any type of inflation is the rise of goods and services across the economy over a period of time. The reason why this occurs is that resources are finite- which means they'll eventually run out- but demand remains the same. The two types of inflation are cost push and demand pull inflation. Cost push inflation is where demand for basic commodities such as oil and gas exceeds supply. Producers therefore have to increase prices to accommodate for the rise in price of their product/service per unit to maintain profit margins. A key consideration is how much a business can decrease their profit margins before having to raise the price of their products/services to consumers.Demand pull inflation is where the business takes advantage of the high demand for their product/service and therefore increases the prices of its products to maximise profit margins.usually this occurs in expanding economiesthink about shareholders; the business will be more appealing as they'll be making more profit which will increase their return on investment (ROI)

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Answered by Lorenza S. Business Studies tutor

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