Part 2: Essay

Direction: Answer the following questions briefly but thoroughly

1. What are the positive and negative effects of inflation to the Philippine economy?

Inflation is not good for the economy because it is the main reason why all products’ costs
increase. If there is a positive effect of inflation, it is it prevent the deflayion.

2. Briefly discuss the difference between cost push and demand pull inflation

Demand-pull inflation is the increase in aggregate demand, categorized by the four sections
of the macroeconomy: households, business, governments, and foreign buyers. On the other
hand, Cost-push inflation is the decrease in the aggregate supply of goods and services
stemming from an increase in the cost of production.