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Pages:
2 pages/≈550 words
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4 Sources
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APA
Subject:
Mathematics & Economics
Type:
Coursework
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English (U.S.)
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MS Word
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Topic:

Forces Behind Inflation: Demand-Pull and Cost-Push Inflation

Coursework Instructions:

PROMPT:
One of the major concerns related to the US economy at the moment is INFLATION. As we covered in class inflation reflects the overall rise in prices. As so many economists say “ uncontrolled inflation is too much money chasing the same goods and services” Here you will research the forces behind inflation
• Under the Trump administration, the US Federal Government, approved a never seen before 2 trillion dollars Stimulus Package in response to the concerns about economic side effects COVID-19 instilled in our society. A significant part of the Stimulus Package was designated to individuals, including unemployment compensation sent to millions of people as well as PPP for business in different industries. As the Biden administration took office, a new Stimulus Package was signed and approved injecting another 1.9 trillion dollars into the economy. As part of the new stimulus plan, the deadline for several benefits associated to the 1st Stimulus Package were postponed and continued for longer periods of time as originally planned. What is Demand Pull Inflation? (5 points) Please explain in detail the Demand Pull Inflation experienced recently in the US. (25 points) Present the evidence and provide the source. You can use up to 2 sources
Hints:
NPR' special series "The Coronavirus Crisis" : https://www(dot)npr(dot)org/2020/03/26/821457551/whats-inside-the-senate-s-2-trillion-coronavirus-aid-package
The 9 minutes Podcast from NPR The indicator - 2nd Stimulus Package " The Biden Bill" : https://www(dot)npr(dot)org/2021/03/03/973468718/the-biden-relief-bill-who-gets-what
CNBC “Trump administration releases list of companies that received most money from small business bailout loans” by Lauren Hirsch and Jacob Pramuk https://www(dot)cnbc(dot)com/2020/07/06/coronavirus-stimulus-list-of-ppp-small-business-loan-recipients-released.html
• What is Cost Push Inflation? (5 points) How has the disruption of supply chain during the Pandemic pressured up the level of inflation ? (10 points) Please find a real case of either a firm, corporation or institution that has been affected by the disruption of the supply chain in their industry and explain their experience. Present the evidence, explain and provide the source. (15 points) You can use up to 2 sources
Hints:
The White House on " Why the Pandemic Has disrupted supply chains" by Susan Helper and Evan Soltas https://www(dot)whitehouse(dot)gov/cea/blog/2021/06/17/why-the-pandemic-has-disrupted-supply-chains/
Latest developments: 5 Minutes Podcast by NPR Business on the troubles at the Port of Los Angeles and Long Beach California https://www(dot)npr(dot)org/2021/10/14/1045904183/port-bottlenecks-have-repercussions-for-u-s-industries-and-consumers
• The Labor Participation Ratio dropped significantly in the last 18 months, some blame the stimulus checks as some blame Burn out. The so called “Great Resignation” became a fact. The relationship employee x employer changed. Employees are calling the shots now. How the labor shortage leads to cost push inflation? Explain in detail, provide evidence and source.
4) Bibliography (10 points) - Bibliography: provide the name of author, the name of the publisher, the name of article/ podcast or video as well as the website link
5) After submitting questions 1 to 4 please go back to your Discussion forum before Tuesday September 29th and analyze answers 1,2 and 3 of another student that is not a member of your group. (You just need to reply to 1 other student only). Post your analyses
There are 4 questions and some articles provided by the professor.

Coursework Sample Content Preview:

Inflation
Author
Affiliation
Course
Instructor
Due Date
Inflation
According to Pettinger (2021), demand-pull inflation is an instance of a rapid increase in the aggregate demand caused by a rapid expansion in the economy. If firms experience a rapid increase in demand for goods and services more than they can cope with, consequently, they will increase the price of goods and services. The underlying cause of this phenomenon is a high supply of money in the economy chasing after few goods. Increased government spending leads to an increase in the money supply in the economy. Manufacturers, as a result, hire more workers to increase production. High employment rates mean more disposable income leading to increased demand for goods and services.
Most recently, the United States government has been worried about inflation that has been caused by government spending through the stimulus package. Snell (2020) claims that the U.S. Senate approved an estimated $2 trillion bill intended to help U.S. citizens and corporations to get back to their feet following the coronavirus epidemic that had led to lockdowns and consequently unemployment. The Bill's impact saw individuals earning less than $75,000 get a stipend of $1,200 and $500 per child, and small businesses as well-received grants of $10,000 (Snell, 2020). Following the government spending, consumer prices went up at a rate last seen forty years a few months after the passing of the Bill. Mutikani (2022) argues that the inflation rate exceeded the Federal Reserve's expectation of 2%. As a result, the consumer price index increased by 0.6 percent in the first month of 2022, after a 0.9 percent increase in December. Therefore, high government spending in the form of stimulus spending led to demand-pull inflation.
On the other hand, cost-push inflation is the decline of the availability of goods and services as a result of an increase in the factors of production. Cost-pull inflation is caused by increases in the cost of raw materials, capital, entrepreneurship, labor, and land. According to Helper and Soltas (2021), inventory levels of vehicles and homes were at a record low due to the pandemic. Because of the global su...
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