ECONOMICS
GDP
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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demand pull inflation
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cost push inflation
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Either A or B
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None of the above
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Detailed explanation-1: -What is Wage Push Inflation? An increase in the price of goods caused by an increase in wages give rise to a wage push inflation. Simply put, a wage push inflation is a type of inflation in costs of goods as a result of increase in wages paid to workers.
Detailed explanation-2: -While economists traditionally worry about a wage-price spiral, there remains no evidence that wages are causing increases in inflation. Workers need pay raises after decades of stagnation, and simply put, wages and employment do not-and should not-have to decline to bring down inflation.
Detailed explanation-3: -Cost-push inflation occurs when supply costs rise or supply levels fall. Either will drive up prices-as long as demand remains the same. Shortages or cost increases in labor, raw materials, and capital goods create cost-push inflation. These components of supply are also part of the four factors of production.
Detailed explanation-4: -Cost-push inflation (also known as wage-push inflation) occurs when overall prices increase (inflation) due to increases in the cost of wages and raw materials.
Detailed explanation-5: -Based on speed, there are 4 different types of inflation – hyperinflation, galloping, walking, and creeping.