Relationship of aggregate demand and supply towards consumer price index/ Nur Izzati Najwa Md Noor

Consumer price index is a measurement of changes in the purchasing power of a currency and the rate of inflation where consumer price index indicates the rising prices and falling prices in goods and services. The consumer price index is very important because it is one of greatest to a healthy economy. Rising in inflation will impact the whole of living cost either in businesses or personal because during inflation everything will relate to currency and will affected the economic condition. Thus, high inflation is not always in favour of the economy as it adversely affects economic and purchasing power of the society. Previous studies had examined the factors of which he researchers find out hat the econometrics analysis supports an interpretation of Turkish inflation in which monetary variables initially money, play a central role in the inflationary process. However, the relationship is still blur and inconclusive. Based on other researcher, they examined and supply side determinant of inflation in Pakistan where the result of study indicated that there was long run GDP, supply, government revenue, government expenditure and inflation in Pakistan. Therefore this study will be conducted in of Malaysia, to demand factors affected consumer price index in the same way. The purpose of this study is trying fill up the gap of aggregate demand and aggregate supply in Malaysia .