Understanding Cost Push and Demand Pull Inflation: An In-Depth Analysis

The video lecture concludes a series on inflation, emphasizing its importance in exams. It covers key terms like price level, consumer price index, and inflation, and explains the concepts of cost push and demand pull inflation using aggregate supply and demand analysis. Cost push inflation is linked to increased production costs, while demand pull inflation is due to increased aggregate demand. The lecture highlights the differences between these inflation types, focusing on their impact on price levels and output gaps. The video serves as a crucial resource for exam preparation.

What are the key terms related to inflation that students are expected to understand?

What is the consumer price index and how is it used?

Describe the impact of aggregate demand on the price level.

What factors can lead to cost push inflation?

How does a negative output gap relate to cost push inflation?

Explain the difference between cost push inflation and demand pull inflation.

What are the implications of a positive output gap in the context of demand pull inflation?