Inflation are mainly cause by 4 factors
mainly about the money and goods
the four factors are
Supply of money goes up
Supply of goods goes down
Demand of money goes down
Demand of goods goes up
Inflation is categorized in two classes
cost push inflation and demand pull inflation
Cost push inflation is whereby the aggregate supply of the country decreased
whereby affected by
the price of the wages and the price of the raw material
which these factors will increase the cost of supply goods and therefore reduce the amount of goods supplied and these which is called as the cost push inflation
other than this two factors there are others factors which will result in increase in price of raw material such as natural disaster and scarce resources such as the oil
whereas
for the price of wages is because of lack of professional and experience employee in a particular industry areas which the industry have to pay more to hire them and increase in the price of the output
basically the increase of raw material and the wages price due to the increase of demand of material and the wages, which normally explained in economics theory
therefore decrease in supply decrease in price which increase the demands for people which increase in inflation
the other is demand pull inflation
which the increase in aggregate demand which the demand increases
which affect by
increase in money supply
increase in government purchase
increase in price level in the rest of the world
Money supply goes up increase the ability of people buying the goods and give rise the inflation
Government purchase increase will give rise to the aggregate demand which increase the inflation
Increase price level in outside country, which will affect the other country to buy outside material which is cheaper from their own country and give rise the inflation of the other country.
Therefore, in summary basically the inflation is affected by the demand of people in a particular company and the ability of the people to demand goods, therefore increase in aggregate demand increase inflation
the decrease in supply will decrease the price and provide more people to buy the goods.
Deflation
the opposite sites of inflation
Supply of money goes down
Supply of goods goes up
Demand of money goes down
Demand of goods goes up
supply of goods faster than the supply of money
the most important in deflation is the devaluation of property and land
which will give loss of a lot of developer and decrease in their value of assets
for more information can read from these sides
