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

Question

Quizplus · Accepted Answer

An increase in the price of oil causes production costs to rise which leads to higher prices for goods and services. This type of inflation is called cost-push inflation. It is not a guarantee that it will trigger demand-pull inflation as it depends on whether consumers are willing and able to pay the higher prices.

A Rise in the Price Level Because of an Increase