Demand-pull inflation occurs when demand for a nation's goods and services outstrips that nation's ability to supply these goods and services. This causes prices to rise generally as a means of limiting demand to the available supply.
An alternative way that we can look at this type of inflation is to say that it occurs when injections exceed withdrawals and the economy is already stretched (i.e. little available labour or factory space) and there is little scope to increase further its level of activity.
Cost-push Inflation.
Alternatively, inflation can be of the cost-push variety. Tills takes place when firms face increasing costs. This could be caused by an increase in wages owing to trade union militancy, the rising costs of imported raw materials and components or companies pushing up prices in order to improve their profit margins.
VOCABULARY NOTES
a persistent rise ,
with no corresponding rise in output
briefly ,
potential benefits
varies considerably in its extent and severity
hence
mild inflation ,
may pose few difficulties
entails enormously high rates of inflation ( )
insurmountable ,
at length
to pull
demand-pull inflation , ,
to push
cost-push inflation , ,
to occur
to outstrip , ,
to stretch ,
little available labour
there is little scope
owing to trade union militancy
in order to improve their profit margins ( )
Assignments
I. Suggest the Russian equivalents
inflation varies considerably in its extent and severity; mild inflation of a few%; rate of inflation; insurmountable problems: demand-pull (cost-push) inflation; the economy is already stretched
II. Replace the parts in italics by synonyms
a persistent rise; hence; may pose few difficulties; which entails enormously high rates; at length; inflation occurs when; little scope to increase its level of activity; firms face increasing costs; owing to trade union militancy
III. Fill in the gaps with the words and expressions from the text
1. Inflation varies considerably in its __ and __.
2. Mild inflation may __ few difficulties for business.
3. Businesses would have experienced great difficulty in __ and __ their production while __ for people to save would have been removed.
4. Demand-pull inflation occurs when __ for a nation's goods and services __ that nation's ability to __ these goods and services.
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|
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5. An alternative way that we can look at this type of inflation is to say tliat it occurs when injections __ withdrawals.
6. An increase in costs for firms, for example, can be caused by an increase in wages __ trade union militancy.
IV. Find in the text English equivalents/or the following
() ( ) . .; ; ; ;
V. Translate into English using all the active possible
1. , . : " ". , , , .
THE IMPACT OF INFLATION ON BUSINESS ( )
Inflation can adversely affect business in a number of ways:
