High inflation that persists beyond the ending of expansionary policies is probably ________.
A)demand-pull inflation
B)Humphrey-Hawkins inflation
C)cost-push inflation
D)a result of unemployment remaining below the natural rate
E)none of the above

Question

Quizplus · Accepted Answer

Cost-push inflation occurs when the cost of production increases, leading to a decrease in aggregate supply. If expansionary policies, such as increasing government spending, continue even after this decrease in supply, then overall prices will increase, resulting in high inflation that persists beyond the ending of expansionary policies.

High Inflation That Persists Beyond the Ending of Expansionary Policies