ECONOMICS
INFLATION
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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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supply-side inflation.
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supply-shock inflation.
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cost-push inflation.
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Detailed explanation-1: -The combination of a successful wage push by warkers and the government’s commitment to high employment leads to (2 demand pull inlation (2) supply side inflati.
Detailed explanation-2: -The relationship between prices and wages. Wages growth is an important driver of inflation because wages are a large share of firms’ costs. If wages growth exceeds productivity growth and then firms raise prices to preserve margins and profitability, this can drive inflation higher.
Detailed explanation-3: -Profit-Push Inflation: In the case of such administered prices, when mark-ups or profit margins are pushed up, without any increase in costs or in demand, the resulting increase in prices is called profit-push inflation.
Detailed explanation-4: -Shortages or cost increases in labor, raw materials, and capital goods create cost-push inflation.