Cost Push Inflation Keynesian Diagram. Cost push inflation by keynesian. Keynesian theory of cost push inflation attributes the basic cause of inflation to supply side factors.
This happens when the cost of production increases and pushes the price level. Cost push inflation is different to demand pull inflation which occurs when aggregate demand grows faster than aggregate supply. 23 3 where aggregate supply and demand are measured along the x axis and price level along the y axis.
Cost push inflation by keynesian.
The cost of production increases when there in increase in prices of the factors such as increases in wages raw materials indirect tax etc. Cost push inflation occurs when there is a decrease in supply of goods and services. This happens when the cost of production increases and pushes the price level. According to the keynesian view the cost push inflation can be occurred when the cost of production gets higher rapidly but the demand for those products and services remains the same.
