Cost-push inflation occurs:
A) at or close to full employment.
B) because of excess total spending.
C) when "too much money is chasing too few goods."
D) when there are increases in production costs.

Question

Quizplus · Accepted Answer

Cost-push inflation occurs when there are increases in production costs, such as increases in the cost of labor, materials, energy, or taxes on businesses. These increased costs are then passed on to consumers in the form of higher prices for goods and services. This type of inflation can occur even when the economy is not at full employment and may not be caused by excess total spending. The phrase "too much money chasing too few goods" is more associated with demand-pull inflation.

Cost-Push Inflation Occurs