Which of the following factors can cause inflation?

Demand-pull factors, cost-push factors, and built-in inflation collectively provide a comprehensive understanding of what can trigger inflation.

Demand-pull inflation occurs when the overall demand for goods and services in an economy surpasses the available supply. This mismatch can drive prices up, as consumers compete to purchase the limited goods and services available. For example, during periods of economic growth, higher consumer spending can lead to increased demand, resulting in inflation.

Cost-push inflation arises when the costs of production for businesses increase, leading to higher prices for consumers. This can happen due to rising costs of raw materials, labor, or other inputs. When production becomes more expensive, companies may pass those costs onto consumers in the form of higher prices.

Built-in inflation, often referred to as wage-price inflation, occurs when businesses and workers expect rising prices in the future and therefore negotiate higher wages. When wages increase, businesses may again raise prices to maintain profit margins, contributing to a cycle of inflation.

Each of these factors focuses on different aspects of economic activity that can influence price levels, illustrating how inflation can emerge from both sides of the marketplace—demand and supply. Understanding these factors provides insight into the dynamics of inflation and the economic forces at play.