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Ination's Effects: Cost-Push and Demand-Pull Ination Determine if each scenario is a Cause or an Effect of ination & Detennirre if the Causes are Demand-Put! or Cost-Push 1. The dollar buys less. and people on xed incomes have decreased purchasing power. 2. Interest rates go up and spending on automobiles and houses falls. 3. Consumers, businesses, and govemments try to buy more goods and services than the economy can produce. 4. The federal government spends more money than it collects in revenues. 5. The cost of labor goes up because the labor market is tight. 6. People speculate heavily to take advantage of rising prices. 7. Loans are repaid in dollars with less purchasing power because they buy less. 8. Higher prices force workers to ask for higher wages. 9. The Federal Reserve System increases the money supply faster than the increase in the Gross Domestic Product. 10. The cost of a raw material such as oil unexpectedly increases