ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A an increase in firms’ profit margins
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B an increase in the supply of money
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C an increase in trade union power
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D an increase in world oil prices
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Detailed explanation-1: -Although not all natural disasters result in higher production costs and therefore, wouldn’t lead to cost-push inflation. Other events might qualify if they lead to higher production costs, such as a sudden change in government that affects the country’s ability to maintain its previous output.
Detailed explanation-2: -Cost-push inflation occurs when supply costs rise or supply levels fall. Either will drive up prices-as long as demand remains the same. Shortages or cost increases in labor, raw materials, and capital goods create cost-push inflation. These components of supply are also part of the four factors of production.
Detailed explanation-3: -Increase in public spending, hoarding, tax reductions, price rise in international markets are the causes of inflation. These factors lead to rising prices. Also, increasing demands causes higher prices which leads to Inflation.
Detailed explanation-4: -Deficit financing. Increase in administrating prices. Increase in interest rates. Increase in population. Increase in oil prices. Mounting public expenditure.