Which of the following scenarios can cause cost-push inflation?

Question

Quizplus · Accepted Answer

A major union wage settlement that increases average wage levels can cause cost-push inflation by increasing the cost of production for firms, which may lead to higher prices for consumers.

Note: None of the other options listed can cause cost-push inflation. An increase in net taxes, a decrease in real interest rates, and an increase in government purchases could potentially lead to demand-pull inflation, but not cost-push inflation. An oil price shock that reduces oil prices could actually lead to deflation rather than inflation.

Which of the Following Scenarios Can Cause Cost-Push Inflation