Which of the following statements about a cost-push inflation is CORRECT?
A) Cost-push inflation starts when an increase in aggregate demand "pushes" costs higher.
B) Cost-push inflation might start with a rise in the price of raw materials, but it requires increases in the quantity of money to persist.
C) To persist, cost-push inflation needs a continual series of cost hikes with no change in aggregate demand.
D) The United States has never experienced a cost-push inflation.

Question

Quizplus · Accepted Answer

Cost-push inflation can start with an increase in the price of raw materials, but for it to persist, there generally needs to be an increase in the money supply to accommodate the higher prices.

Which of the Following Statements About a Cost-Push Inflation Is