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State four factors that may cause inflation in an economy

Outline four causes of inflation in an economy.

Answers

Davis
-Increase money supply unaccompanied by proportionate
increase in the output of goods and services.
-Increase in government expenditure.
-Abnormal speculation and hoarding goods to create artificial
shortages hence raising prices of goods.
-Uncontrolled increase in costs of productions.
-Increase in profit margin.
-Reduction in subsidy

i. Increase in money supply
ii. Increase government expenditure in excess of tax revenue
iii. Increase in wages without corresponding increase in output
iv. Increase in cost of input / oil/ intermediate goods
v. Increase in taxation
vi. Balance of payment surplus and inflow of foreign funds
vii. Shortage of goods / services
viii. High cost of imports (of both capital and finished goods)
Githiari answered the question on September 22, 2017 at 20:56

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