Which of the following can trigger inflation.
Several factors can trigger inflation. Some of the common triggers include:
1. Increase in the money supply: When there is too much money circulating in the economy, it can lead to an increase in aggregate demand, which in turn can cause inflationary pressures.
2. Excessive government spending: If the government spends beyond its means and creates a budget deficit, it may resort to borrowing or printing money, which can increase the money supply and lead to inflation.
3. Demand-pull inflation: An increase in consumer or business spending, often fueled by factors like low interest rates, increased consumer confidence, or strong economic growth, can cause demand to outpace supply and lead to inflation.
4. Cost-push inflation: When there is an increase in the cost of inputs such as raw materials, labor, or energy, businesses may pass on these higher costs to consumers in the form of higher prices, triggering inflation.
5. Increase in wages: If wages rise faster than productivity growth, it can lead to higher costs for businesses, which eventually results in increased prices and inflation.
6. International factors: Changes in foreign exchange rates, import prices, or global commodities markets can impact the cost of goods and services, potentially leading to higher inflation in an economy.
It's important to note that these factors are not exhaustive, and inflation can be influenced by a combination of multiple factors, often interacting with each other.