Which of the following statements about a cost-push inflation is correct?

Question

Quizplus · Accepted Answer

Cost-push inflation begins with an increase in the cost of production, such as a rise in the price of raw materials or wages. It can persist if the increase in costs is matched by an increase in the quantity of money in the economy, which leads to a general rise in prices. Thus, choice B is correct. Choice A is incorrect as it describes demand-pull inflation. Choice C is incorrect as it implies that cost-push inflation cannot persist with a change in aggregate demand. Choice D is incorrect as the United States has experienced periods of cost-push inflation in the past.

Which of the Following Statements About a Cost-Push Inflation Is