ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Cost-push inflation occurs when overall prices increase (inflation) due to increases in the cost of wages and raw materials. Cost-push inflation can occur when higher costs of production decrease the aggregate supply (the amount of total production) in the economy.

Detailed explanation-2: -When a supply shortage happens-due to a natural disaster, an increase in labor prices or supply chain problems-companies typically respond by increasing their prices to cover higher production costs. This is referred to as cost-push inflation.

Detailed explanation-3: -Answer and Explanation: Reason: Inflation can be caused due to excessive aggregate expenditure. This type of inflation is called as demand pull inflation. It can also be caused due to increase in input costs of production, in which case it is called as cost push inflation.

Detailed explanation-4: -Cost-push inflation occurs when the supply of a good or service changes, but the demand for it stays the same. It occurs most often when a monopoly exists, wages increase, natural disasters occur, regulations are introduced, or exchange rates change. Cost-push inflation is rare.

Detailed explanation-5: -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.