Cost-push inflation is the result of:
A) high aggregate demand.
B) low aggregate demand.
C) favourable supply shocks.
D) adverse supply shocks.

Question

Quizplus · Accepted Answer

Cost-push inflation is caused by adverse supply shocks, such as an increase in the price of oil or other key inputs, which leads to higher costs of production for firms. As a result, firms increase prices to maintain their profit margins, which leads to inflation. High aggregate demand, low aggregate demand, or favourable supply shocks would not directly cause cost-push inflation.

Cost-Push Inflation Is the Result Of