The complexity in recognizing the type of inflation:
A)arises because demand-pull inflation always follows the cost-push inflation.
B)arises because sometimes the original source of inflation is unknown.
C)arises because cost-push inflation always follows the demand-pull inflation.
D)arises because demand-pull inflation is self-limiting while cost-push inflation will continue as long as there is excess spending.

Question

Quizplus · Accepted Answer

The complexity in recognizing the type of inflation arises because sometimes the original source of inflation is unknown, making it difficult to identify whether it is demand-pull or cost-push inflation. Option A is incorrect as demand-pull inflation can occur independently without being preceded by cost-push inflation. Option C is incorrect as cost-push inflation can occur independently without being preceded by demand-pull inflation. Option D is incorrect as both demand-pull and cost-push inflation can continue as long as the underlying factors causing them persist.

The Complexity in Recognizing the Type of Inflation