ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A borrowers
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B consumers
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C creditors
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D exporters
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Detailed explanation-1: -Shortages or cost increases in labor, raw materials, and capital goods create cost-push inflation.
Detailed explanation-2: -Which of the following best defines cost-push inflation? Price rising due to an increase in the price of a firm’s inputs.
Detailed explanation-3: -The right solution to cost-push inflation is by reducing production costs. A supply-side policy is a correct solution, but generally, it will take a long time to affect. The government can provide wage subsidies. In this case, the government helps businesses by paying a portion of labor costs.
Detailed explanation-4: -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.