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

Question

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

Quizplus · Accepted Answer

Cost-push inflation is caused by a decrease in short-run aggregate supply, which leads to higher production costs and thus higher prices for goods and services. This type of inflation is often triggered by factors such as higher input costs (e.g. energy or labor), government regulations, or supply shocks (e.g. natural disasters). A increase in short-run aggregate supply, on the other hand, would reduce production costs and put downward pressure on prices, thereby reducing the risk of cost-push inflation.

Cost-Push Inflation Is Caused By