Cost-push inflation can start with
A) higher money wage rates.
B) an increase in government expenditure.
C) an increase in transfer payments.
D) lower taxes.

Question

Quizplus · Accepted Answer

Cost-push inflation occurs when there is an increase in the cost of production, such as higher salaries for workers, which leads to an increase in prices. Therefore, (A) higher money wage rates is the correct choice as it is the only option that describes such an increase in production costs. (B) an increase in government expenditure, (C) an increase in transfer payments, and (D) lower taxes do not directly affect the cost of production and are more likely to cause demand-pull inflation instead.

Cost-Push Inflation Can Start with