This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: . Demand-pull inflation occurs when too much spending pulls the price level upward. Cost-push inflation may be traced to excessive increases in wages and prices of raw materials which drive up production costs and therefore, the price level upward. The Rule of 70 estimates the number of years it will take for prices to double. It may be computed by dividing the constant number 70 with the annual rate of inflation. A seven percent (7%) annual rate of inflation may mean that in ten years time, prices will double. Inflation may affect the following in different ways: 1. Fixed-Nominal Income Earners 2. Savers 3. Debtors and creditors...
View Full Document
- Spring '10