Cost- push inflation might start with
A) a rise in money wage rates.
B) an increase in the quantity of money.
C) a fall in the prices of raw materials.
D) an increase in government expenditures.

Question

Quizplus · Accepted Answer

Cost-push inflation occurs when the cost of production goes up, which leads to an increase in the price of the final product. A rise in money wage rates is a key factor in cost-push inflation because it increases the cost of labor for businesses, leading them to increase the prices of their products to maintain profitability. Option B (increase in the quantity of money) would lead to demand-pull inflation rather than cost-push inflation. Option C (fall in the prices of raw materials) would lead to deflation, not inflation. Option D (increase in government expenditures) could potentially lead to demand-pull inflation, but not necessarily cost-push inflation.

Cost- Push Inflation Might Start with