Cost-push inflation is
A) inflation caused by increases in aggregate demand that generate an even larger increase in aggregate supply.
B) inflation caused by increases in aggregate demand that are not matched by increases in aggregate supply.
C) inflation caused by decreases in aggregate supply that generate an even larger decrease in aggregate demand.
D) inflation caused by decreases in aggregate supply that are not matched by decreases in aggregate demand.

Question

Quizplus · Accepted Answer

Cost-push inflation is caused by a decrease in aggregate supply, which results in producers having to pay more for resources such as labor and raw materials. This increase in production costs leads to higher prices, which can cause inflation. Option D is the only choice that describes inflation caused by a decrease in aggregate supply without any reference to changes in aggregate demand.

Cost-Push Inflation Is