ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Cost-push inflation occurs when the total supply of goods and services in the economy which can be produced (aggregate supply) falls. A fall in aggregate supply is often caused by an increase in the cost of production.

Detailed explanation-2: -Other events might lead to cost-push inflation if it causes production costs to rise. This can be due to limited supply, higher demand, or government influence.

Detailed explanation-3: -This type of inflation generally occurs when incomes are rising, and unemployment is low. As demand increases, supply remains constant, pulling the prices for goods and services up. The U.S. economy is currently experiencing a combination of cost-push and demand-pull inflation.

Detailed explanation-4: -The rise in wages will increase the cost of production and thus will give rise to the cost-push inflation.

Detailed explanation-5: -At its root, inflation is driven by too much demand relative to supply.