A rise in the price level because of an increase in the money wage rate
A) definitely triggers a cost-push inflation.
B) definitely triggers a demand-pull inflation.
C) might trigger a cost-push inflation.
D) might trigger a demand-pull inflation.

Question

Quizplus · Accepted Answer

An increase in the money wage rate can lead to higher production costs for businesses, which might then pass these costs onto consumers in the form of higher prices, potentially triggering cost-push inflation. Demand-pull inflation, on the other hand, is caused by an increase in demand across the economy, not directly by rising costs.

A Rise in the Price Level Because of an Increase