A rise in the price level because of an increase in the price of oil
A) definitely triggers a cost- push inflation.
B) might trigger a demand- pull inflation.
C) definitely triggers a demand- pull inflation.
D) might trigger a cost- push inflation.

Question

Quizplus · Accepted Answer

An increase in the price of oil might trigger a cost-push inflation as it raises production costs for firms. However, it could also lead to a decrease in aggregate supply which would result in a demand-pull inflation. Therefore, it might trigger a cost-push inflation, but it is not definite.

A Rise in the Price Level Because of an Increase