Cost- push inflation starts with a
A) raising GDP and rising unemployment rate.
B) raising GDP and falling unemployment rate.
C) falling GDP and rising unemployment rate.
D) falling GDP and falling unemployment rate.

Question

Quizplus · Accepted Answer

Cost-push inflation is caused by a decrease in aggregate supply, which can result from a number of factors including an increase in the cost of production inputs such as labor or raw materials. A fall in GDP suggests a decrease in aggregate supply, while a rise in unemployment rate suggests a decrease in aggregate demand, so both factors are pointing towards a decrease in aggregate supply which can lead to cost-push inflation.

Cost- Push Inflation Starts with a