ENTREPRENEURIAL PLANNING
FINANCIAL PLANNING AND ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Choose the correct statements regarding cost push inflation (2 correct answers)
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Too much spending chasing too few good
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Increase in the price level caused by excessive spending beyond the economy’s capacity to produce
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Major source of the inflation is supply shock
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Rising average cost of a particular level of output cause the price of the output to goes up even if there are no excessive spending
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Explanation:
Detailed explanation-1: -Cost-push inflation happens when there is a decline in the supply of goods and services and demand remains unchanged or even grows, driving prices and inflation higher.
Detailed explanation-2: -Which of the following best defines cost-push inflation? Price rising due to an increase in the price of a firm’s inputs.
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.
There is 1 question to complete.