WAEC Economics 2017 Theory — Question 18

Model answer

Causes of demand pull inflation: (i) Increase in the absolute total population (ii) Decrease in supply of output (iii) Increase in taxation (any relevant third cause may include increase in government spending). Causes of cost-push inflation: (i) Increase in the cost of factors of production (ii) Increase in taxation (iii) Fall in the domestic value of money.