Which of the following is something that could cause cost-push inflation?
A) An epidemic increases the need for medical care, pushing up the price level.
B) A reduction in consumer spending due to consumer pessimism reduces demand.
C) A reduction in regulation causes a surge in business activity.
D) An increase in the price of oil raises the transportation and energy expenses of producers.

Question

Quizplus · Accepted Answer

Cost-push inflation occurs when the costs of production increase, leading to an increase in the prices of goods and services. An increase in the price of oil is a classic example of this, as it raises transportation and energy expenses for producers, who may then pass these increased costs on to consumers in the form of higher prices.

Which of the Following Is Something That Could Cause Cost-Push