Cost-push inﬂation
A) is caused by excessive total spending.
B) shifts the nation's production possibilities curve leftward.
C) moves the economy inward from its production possibilities curve.
D) is a mixed blessing because it has positive effects on real output and employment.

Question

Quizplus · Accepted Answer

Cost-push inflation occurs when production costs increase, leading to a decrease in the aggregate supply of goods and services. This results in the economy operating inside its production possibilities curve, as higher costs reduce output.

Cost-Push Inﬂation