Cost pull inflation occurs when the:
A) price of a key input increases suddenly.
B) price level changes in response to changes in the business cycle.
C) price of necessity goods increases suddenly.
D) business cycle becomes sporadic and unpredictable.

Question

Quizplus · Accepted Answer

Cost pull inflation occurs when the price of a key input, such as labor or raw materials, increases suddenly. This leads to higher production costs for businesses, forcing them to raise prices to maintain their profit margins.

Cost Pull Inflation Occurs When The