ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Cost-pull inflation
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Demand-push inflation
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Cost-push inflation
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All is correct
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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: -Examples of Cost-Push Inflation Electric power suppliers need high levels of natural gas to create electricity. When global policies, war, or natural disasters drastically reduce the oil supply, gasoline prices rise because demand remains relatively stable even as supply shrinks.
Detailed explanation-3: -Cost-push is one of the two causes of inflation. The other is demand-pull inflation. Demand-pull inflation is the primary cause of inflation. It occurs when the aggregate demand for a good or service outstrips aggregate supply, and it starts with an increase in consumer demand.
Detailed explanation-4: -The answer is B. Cost-push inflation reduces aggregate supply, thereby increasing the aggregate price level and inflation.