Graphically, cost-push inﬂation is shown as a
A) leftward shift of the AD curve.
B) rightward shift of the AS curve.
C) leftward shift of the AS curve.
D) rightward shift of the AD curve.

Question

Quizplus · Accepted Answer

Cost-push inflation is caused by an increase in production costs, such as an increase in wages or raw material prices. This leads to a decrease in aggregate supply as firms are now producing at a higher cost. Therefore, graphically, cost-push inflation is shown as a leftward shift of the AS curve.

Graphically, Cost-Push Inﬂation Is Shown as a