_____ inflation occurs when a supply shock reduces aggregate supply.
A) Cost-push
B) Demand-pull
C) Sticky
D) Demand-push

Question

Quizplus · Accepted Answer

Cost-push inflation occurs when there is a decrease in aggregate supply due to increased production costs, such as higher wages or the cost of raw materials. This leads to a decrease in the quantity of goods and services supplied, which then leads to higher prices.

_____ Inflation Occurs When a Supply Shock Reduces Aggregate Supply