ECONOMICS (CBSE/UGC NET)

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

Detailed explanation-2: -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-3: -With less supply but unchanged or higher demand, companies raise their prices, pushing up inflation. Cost-push inflation occurs when demand remains static or grows even when prices climb higher. If demand for goods or services falls when the prices rise, then inflation remains subdued.

Detailed explanation-4: -In a cost-push situation, it’s the producers. They increase prices because of their high costs. This is typically caused by increases in cost of production. In a cost-pull situation, it’s more related to consumer spending.