_____ inflation occurs when a negative supply shock hits the economy, shifting the short-run aggregate supply curve to the left.
A) Demand-pull
B) Demand-push
C) Cost-push
D) Cost-pull

Question

Quizplus · Accepted Answer

Cost-push inflation occurs when there is a decrease in aggregate supply due to an increase in the production costs of goods and services, such as wages or raw materials. This leads to higher prices and a decrease in real output in the short-run.

_____ Inflation Occurs When a Negative Supply Shock Hits the Economy