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ease in the cost of production. This in one way or the other, results to an increase in the prices of final products. For instance, if the prices of raw materials increase, this increases the cost of production, which in response makes the industries to increase the prices of their products with the aim of maintaining steady profits. In addition, labor costs can also cause inflation. This is based on the fact that, when workers demand wage increase, industries usually have no choice apart from passing similar costs to their customers. Also an increase in workers wages, increases demand, since such workers will be having more money, as an effect, raises the demand pool, which one form of inflation.

Apart from the two discussed above, inflation can also be caused by international lending along with national debts. This is due to the fact that, when nations borrow money, they normally have to deal with interests, which at the end leads to price increase as a method of keeping at par with their debts. A drop in the exchange rate can also lead to inflation. This is because; the government will have to deal with differences in the import and export levels.

Inflation can also result as an effect of federal taxes imposed on consumer products like cigarettes or fuel. An increase in tax, will make suppliers to pass on such like expenses to the consumer; the catch, on the other hand is that, once prices have increased, it has been proved that it will then be very difficult to come down, even if the taxes are reduced later on. wars have been the cause of inflation in the recent times. This is rooted in the reason that, during and after wars, the governments have to recoup the money spend and repay the cash borrowed from the central bank. In addition, it has been proved that, wars affect everything that is on the international markets, starting with labor costs to product demand, so at the end, wars usually produces a rise in prices which rarely comes down after wards.

Since 19th century, unemployment has been the major cause of inflation. The reality in the 19th century is that, there was an emergence of large unemployment scale. The connection between inflation and unemployment is invested in that Marxian theory. The theory asserts that, unemployment acts as a reservoir of labor, which in one way or the other restrains the wage inflation. In the 20th century, same aspects in the Keynesian economics include Non-Accelerating Inflation Rate of Unemployment and the Philips curve, which further explains the connection of inflation and unemployment.

There have been several policies that have been recommended for combating inflation. Monetary policy has been considered as being the main tool for combating inflation. The central bank has to be charged with the responsibility of maintaining federal funds lending rate at a very low level per year along with a targeted low inflation range. This low inflation rate is aimed as deflationary circumstances are seen as being dangerous for the economy health. The central bank can affect inflation through interest setting, along with other operations. The central bank can maintain high interest rates and low growth of money supply as the traditional way of inflation control. Monetarists have emphasized to control inflation, maintaining steady money growth rate and usage of monetary policy are the best ways. On the other hand, Keynesians have on their part e