Which of the following statements about inflation is true?
A) A major flood that destroys an important crop could cause cost-push inflation.
B) Demand-pull inflation tends to occur as the rate of unemployment in the economy increases.
C) Inflationary pressure comes only from the buyers' side of the market, or only from the sellers' side of the market.
D) Expectations by businesses and households about future economic conditions have no effect on inflationary pressure.

Question

Quizplus · Accepted Answer

A major flood destroying an important crop can lead to cost-push inflation by increasing the costs of goods and services, which in turn can cause overall prices to rise.

Which of the Following Statements About Inflation Is True