WHY INFLATION OCCURS

Economists have been giving different explanations throughout the 19th and 20th centuries for the occurrence of inflation—the debate still goes on. But the debate has certainly given us a clearer picture of inflation. We shall see the reasons responsible for inflation in two parts—

1. Pre-1970s

Till the rise of the monetarist school, economists used to agree upon two reasons behind inflation:

(a) Demand-Pull Inflation (b) Cost-Push Inflation (a) Demand-Pull Inflation (b) Cost-Push Inflation