ʺShoe Industry under Pressure Amid Rising Costs ʺ
Rising costs have forced about 15 per cent of shoe manufacturers in a major south China industrial centre to shut down or relocate in the past year. [the firms have] identified rising wages as a key
Factor behind the closures and relocations from Dongguan. The problems in the footwear industry
Reflect broader issues affecting manufacturers across Chinaʹs Pearl River Delta. ʺ
As the same pressures affect other industries across China, we expect to see

Question

Quizplus · Accepted Answer

The article mentions rising costs as a key factor behind the closures and relocations of shoe manufacturers in Dongguan, and this reflects broader issues affecting manufacturers across China's Pearl River Delta. This suggests that the industry is experiencing cost-push inflation, which occurs when rising input costs (e.g. wages) lead to higher prices and lower output. There is no evidence of demand-pull inflation, which occurs when rising demand exceeds supply and puts upward pressure on prices. Likewise, there is no indication of a movement along the Phillips curve, which shows the inverse relationship between unemployment and inflation in the short run. Therefore, the best choice is A.

ʺShoe Industry Under Pressure Amid Rising Costs ʺ