Inflation that is driven by the rising cost of inputs including wages and salaries is called
A) demand-pull inflation.
B) cost push inflation.
C) stagflation.
D) profit push inflation.

Question

Quizplus · Accepted Answer

Cost push inflation is driven by the rising cost of inputs such as wages and salaries. This leads to an increase in the cost of production which, in turn, leads to higher prices for consumers. Demand-pull inflation, on the other hand, is caused by an increase in demand for goods and services that outstrips the supply, leading to higher prices. Stagflation is a situation where there is high inflation and high unemployment. Profit push inflation is not a commonly used term and is not a recognized type of inflation.

Inflation That Is Driven by the Rising Cost of Inputs