Cost-push inflation is caused by:
A)an increase in aggregate demand.
B)a decrease in aggregate demand.
C)an increase in aggregate supply.
D)a decrease in aggregate supply.
E)optimism among the consumers.

Question

Quizplus · Accepted Answer

Cost-push inflation is caused by a decrease in aggregate supply, typically due to an increase in the cost of production (e.g. wages, raw materials, energy costs). As input costs increase, firms are forced to raise their prices in order to maintain their profit margins. This results in an overall increase in the price level, which is known as inflation.

Cost-Push Inflation Is Caused By