Cost-push inflation arises from:
A)a decrease in aggregate demand.
B)a decrease in aggregate supply.
C)an increase in aggregate demand.
D)an increase in aggregate supply.

Question

Quizplus · Accepted Answer

Cost-push inflation arises from a decrease in aggregate supply, which means an increase in costs (such as wages, raw materials, or taxes) for producers that results in higher prices for consumers. This type of inflation is also called supply-side inflation or supply shock inflation. It is different from demand-pull inflation, which arises from an increase in aggregate demand.

Cost-Push Inflation Arises From