Cost-push inflation happens when technological innovation unexpectedly lowers the cost of production, causing increased demand for goods and services.

Question

Quizplus · Accepted Answer

Cost-push inflation occurs when the cost of production increases, often due to supply-side factors such as an increase in the price of raw materials or labor. It leads to a decrease in supply and an increase in prices. The statement in the question describes demand-pull inflation, where increased demand for goods and services leads to higher prices.

Cost-Push Inflation Happens When Technological Innovation Unexpectedly Lowers the Cost