The effects of infllation on consumer behavior,

Mar 30th, 2015
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Bergin University of Canine Studies
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The expected and unexpected inflation, theories of inflation, demand pull inflation and push pull inflation

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Expected and Unexpected InflationExpected inflation is inflation people expect to occur. Individuals set prices for goods and services relative to other prices in the economy. The law of demand and supply normally affects the relative prices which is the price people want. Relative price increase is normally added on to inflation people expect.Economists look carefully at how individuals form expectations because they believe there is some rationale in how people form some expectations and this is based on the information available. This will definitely lead to a debate among the economists about what is meant by rationale and how the expectations are formed. Some of the economists will argue that rational people will expect the same inflation that is predicted by the economists models where expectations are formed based on what the models predict.

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