ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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an increase in the money supply
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an increase in government expenditure on pensions
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a rise in the price of housing
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a rise in the cost of transporting goods
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Detailed explanation-1: -The most common cause of cost-push inflation starts with an increase in the cost of production, which may be expected or unexpected. For example, the cost of raw materials or inventory used in production might increase, leading to higher costs.
Detailed explanation-2: -The correct answer is Increase in money supply and Fall in production. Inflation is a caused when there is an increase in money supply and fall in production. Also occurs due to rising prices of goods and services in an economy.
Detailed explanation-3: -The most common example of cost-push inflation occurs in the energy sector – oil and natural gas prices.
Detailed explanation-4: -Answer and Explanation: Reason: Inflation can be caused due to excessive aggregate expenditure. This type of inflation is called as demand pull inflation. It can also be caused due to increase in input costs of production, in which case it is called as cost push inflation.
Detailed explanation-5: -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.