Cost- push inflation can start with
A) an increase in transfer payments.
B) higher money wage rates.
C) an increase in government expenditures.
D) lower taxes.

Question

Quizplus · Accepted Answer

Cost-push inflation is caused by a decrease in aggregate supply, usually due to an increase in production costs such as wages. Thus, higher money wage rates would increase firms' costs of production, reducing aggregate supply and potentially leading to cost-push inflation. Transfer payments and lower taxes would have a minimal effect on aggregate supply, while an increase in government expenditures could potentially stimulate aggregate demand and lead to demand-pull inflation, rather than cost-push inflation.

Cost- Push Inflation Can Start with