Cost- push inflation can be started by
A) an increase in the money prices of raw materials.
B) a decrease in government expenditures on goods and services.
C) an increase in the quantity of money.
D) a decrease in the money wage rate.

Question

Quizplus · Accepted Answer

Cost-push inflation is caused by an increase in production costs, such as a rise in the prices of raw materials. Therefore, choice A is the correct answer. B is incorrect because a decrease in government expenditures would cause a decrease in aggregate demand, which would lead to deflationary pressure rather than inflation. C is incorrect because an increase in the quantity of money would lead to demand-pull inflation rather than cost-push inflation. D is incorrect because a decrease in the money wage rate would cause a decrease in production costs, which would lead to deflationary pressure rather than inflation.

Cost- Push Inflation Can Be Started by