GENERAL KNOWLEDGE

Detailed explanation-1: -Cost-push inflation occurs when the aggregate supply of goods and services decreases because of an increase in production costs. For instance, if low-paid workers in a factory form a union and demand higher wages, it’s possible the factory owner will simply shut down the business in response.

Detailed explanation-2: -Cost-push inflation occurs when overall prices increase (inflation) due to increases in the cost of wages and raw materials. Cost-push inflation can occur when higher costs of production decrease the aggregate supply (the amount of total production) in the economy.

Detailed explanation-3: -It is an increase in the tax rates which will cause cost push inflation.

Detailed explanation-4: -Demand pull inflation arises when the aggregate demand becomes more than the aggregate supply in the economy. Cost pull inflation occurs when aggregate demand remains the same but there is a decline in aggregate supply due to external factors that cause rise in price levels.