For a cost- push inflation to occur, oil price increases must be accompanied by
A)increases in the quantity of money.
B)increases in government expenditures.
C)decreased investment spending.
D)lower personal tax rates.

Question

Quizplus · Accepted Answer

For cost-push inflation to occur, an increase in oil prices must be accompanied by an increase in the quantity of money, which allows the higher costs to be passed on to consumers in the form of higher prices.

For a Cost- Push Inflation to Occur, Oil Price Increases