ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Too much demand or too little supply can mean higher prices and inflation for everybody. Cost-push inflation happens when there is a decline in the supply of goods and services and demand remains unchanged or even grows, driving prices and inflation higher.

Detailed explanation-2: -Cost-push inflation occurs when the aggregate supply of goods and services decreases because of an increase in production costs. For instance, if low-paid workers in a factory form a union and demand higher wages, it’s possible the factory owner will simply shut down the business in response.

Detailed explanation-3: -This type of inflation generally occurs when incomes are rising, and unemployment is low. As demand increases, supply remains constant, pulling the prices for goods and services up. The U.S. economy is currently experiencing a combination of cost-push and demand-pull inflation.