Cost-push inflation is an inflation that results from an initial___________ .
A) increase in investment
B) increase in taxes
C) increase in money wage rates or money prices of raw materials
D) decrease in taxes

Question

Quizplus · Accepted Answer

Cost-push inflation occurs when there is an increase in money wage rates or money prices of raw materials, which then leads to an increase in production costs. This increase in production costs is then passed on to consumers in the form of higher prices, causing inflation. Increase in investment (A) or decrease in taxes (D) do not directly cause cost-push inflation, while an increase in taxes (B) could potentially lead to cost-push inflation if it causes an increase in production costs. However, C is the most direct and accurate choice.

Cost-Push Inflation Is an Inflation That Results from an Initial___________