When a cost-push inflation starts
A) the price level falls and the money wages rises.
B) real GDP rises faster than the quantity of money.
C) the short-run aggregate supply curve shifts rightward.
D) the price level rises and real GDP decreases.

Question

Quizplus · Accepted Answer

Cost-push inflation occurs when the costs of production increase, leading to a decrease in the aggregate supply of goods and services at existing price levels, thus causing the price level to rise and real GDP to decrease.

When a Cost-Push Inflation Starts