Cost pull inflation occurs when:
A)the price of a key input increases suddenly.
B)the price level changes in response to changes in the business cycle.
C)the price of necessity goods increases suddenly.
D)the 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, which causes businesses to increase their prices in order to maintain their profit margins.

Cost Pull Inflation Occurs When