Cost-push inflation is caused by:
A)an increase in aggregate demand.
B)a decrease in aggregate demand.
C)an increase in short-run aggregate supply.
D)a decrease in short-run aggregate supply.

Question

Cost-push inflation is caused by:
A)​an increase in aggregate demand.
B)​a decrease in aggregate demand.
C)​an increase in short-run aggregate supply.
D)​a decrease in short-run aggregate supply.

Quizplus · Accepted Answer

Cost-push inflation occurs when there is a decrease in short-run aggregate supply, meaning the input costs to produce goods and services increase, causing prices to rise. This is typically caused by factors such as an increase in the cost of raw materials or an increase in wages for workers. Therefore, the best choice is D.

Cost-Push Inflation Is Caused By