Cost-push inflation might initially result from
A)an increase in the quantity of money.
B)a decrease in the quantity of money.
C)the use of new technology.
D)an increase in government expenditure.
E)an increase in the cost of resources.

Question

Quizplus · Accepted Answer

Cost-push inflation occurs when there is a decrease in aggregate supply due to an increase in the cost of resources such as labor, raw materials, or energy. This increase in production costs leads to a decrease in the profitability of firms, which may then pass on these higher costs to consumers in the form of higher prices. The other choices A, B, C, and D all relate to demand-pull inflation, where inflation is caused by an increase in aggregate demand in the economy.

Cost-Push Inflation Might Initially Result from