At the start of a cost-push inflation
A) only real GDP changes while the price level remains constant.
B) the price level and real GDP both increase.
C) the price level rises and real GDP decreases.
D) the price level rises and real GDP does not change.

Question

Quizplus · Accepted Answer

Cost-push inflation occurs when the cost of production for goods and services rises, leading to an increase in prices (price level rises) and a decrease in the quantity of goods and services produced (real GDP decreases) as companies cut back on production due to higher costs.

At the Start of a Cost-Push Inflation