A stagflation can turn into a cost- push inflation process when .
A) the quantity of money persistently increases
B) the money wage rate decreases
C) taxes consistently increase
D) the quantity of money persistently decreases

Question

Quizplus · Accepted Answer

A cost-push inflation process occurs when the cost of production increases, leading to a decrease in supply and an increase in prices. In the case of stagflation, there is already a combination of high inflation and stagnant economic growth. If the quantity of money persistently increases during stagflation, it can lead to higher demand for goods and services and further increase in prices due to the cost of production increasing.

A Stagflation Can Turn into a Cost- Push Inflation Process