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

Question

Quizplus · Accepted Answer

Cost-push inflation refers to the situation where the increase in the prices of goods and services is caused by the increase in the cost of production. An increase in the money prices of raw materials, such as oil or steel, will increase the cost of production for businesses, pushing prices up. This is different from demand-pull inflation, which is caused by an increase in demand for goods and services. Decrease in government expenditure, decrease in the money wage rate, or an increase in the quantity of money are not directly related to cost-push inflation.

Cost-Push Inflation Can Be Started by