ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A a fall in the exchange rate
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B a fall in the interest rate
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C a rise in the productivity of industrial workers
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D an improvement in the terms of trade
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Detailed explanation-1: -Demand-pull inflation includes times when an increase in demand is so great that production can’t keep up, which typically results in higher prices. In short, cost-push inflation is driven by supply costs while demand-pull inflation is driven by consumer demand-while both lead to higher prices passed onto consumers.
Detailed explanation-2: -Too little supply or too much demand can mean higher prices for everybody. Demand-pull inflation is when growing demand for goods or services meets insufficient supply, which drives prices higher.
Detailed explanation-3: -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.