'Cost-push inflation' can be caused by:
A)a high growth rate in real wages.
B)an increase in aggregate demand, which pushes prices higher.
C)an increase in aggregate supply, which pushes prices higher.
D)growth in aggregate demand not keeping up with the growth in aggregate supply.

Question

Quizplus · Accepted Answer

Cost-push inflation is caused by an increase in production costs, such as an increase in wages, which leads to an increase in prices for goods and services. A high growth rate in real wages would result in an increase in production costs, causing cost-push inflation. Choices B and D refer to demand-pull inflation, while C does not cause inflation but rather a decrease in prices due to an increase in aggregate supply.

'Cost-Push Inflation' Can Be Caused By