ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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during a recession because firms make big profits while pushing wages to low levels and their spending can push up prices over time
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during the intermediate stage of the AS curve when prices reach around 3% and unemployment is low
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when the economy reaches the limits of its PPC and factors of production or have increased cost of production usually in a boom
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when there are too many good for the money and so people have to compete to get what they want
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Detailed explanation-1: -Definition: Cost push inflation is inflation caused by an increase in prices of inputs like labour, raw material, etc. The increased price of the factors of production leads to a decreased supply of these goods.
Detailed explanation-2: -Inflation occurs when the prices of goods and services increase over a long period of time, causing your purchasing power, or the amount of goods and services you can buy with a single unit of currency, to decrease.
Detailed explanation-3: -Demand-pull inflation arises when the total demand for goods and services (i.e. ‘aggregate demand’) increases to exceed the supply of goods and services (i.e. ‘aggregate supply’) that can be sustainably produced.
Detailed explanation-4: -Answer: Inflation may or may not result in an increase in production. Also, inflation has a positive impact on production as long as the economy does not reach full employment stage. Further, if the wages and production costs start rising rapidly, then it negatively impacts production activities.