(a) Cost-push inflation occurs when rising production costs (e.g., wages, raw materials, or energy prices) force producers to increase prices to maintain margins, shifting the aggregate supply curve leftward. In Ghana, this could stem from fuel price hikes due to global oil fluctuations, impacting sectors like transportation and manufacturing.

(b) Galloping inflation is a rapid but controllable rise in prices, typically 10-100% annually, eroding purchasing power but allowing economic adjustments (e.g., Zimbabwe in the early 2000s at triple-digit rates). Hyperinflation is extreme, exceeding 50% monthly (or thousands percent yearly), causing currency collapse, barter resurgence, and economic chaos (e.g., Zimbabwe 2008 with rates over 89 sextillion percent).

(c) From the lender’s perspective, inflation erodes the real value of loan repayments, as fixed nominal interest rates yield lower real returns (real rate = nominal – inflation). High inflation increases default risks if borrowers’ costs rise, reducing bank profitability; however, banks may adjust by raising nominal rates or indexing loans, as seen in Ghana during 2022-2023 inflation spikes post-DDEP.

(d) Four major types of unemployment:

• Frictional: Temporary job transitions, e.g., graduates seeking first jobs in Ghana’s labor market.
• Structural: Mismatch between skills and jobs, e.g., decline in traditional farming displacing workers without retraining for tech sectors.
• Cyclical: Due to economic downturns, e.g., reduced demand during Ghana’s 2017-2019 banking cleanup leading to layoffs.
• Seasonal: Fluctuations in demand, e.g., agricultural workers idle off-harvest in cocoa regions.