Cost-push inflation is caused by
A) a leftward shift in the aggregate supply curve.
B) a rightward shift in the aggregate supply curve.
C) a leftward shift in the aggregate demand curve.
D) a rightward shift in the aggregate demand curve.
E) none of these.

Question

Quizplus · Accepted Answer

Cost-push inflation occurs when the cost of production increases, causing a leftward shift in the aggregate supply curve. This can happen due to factors such as an increase in wages or the price of raw materials. As production becomes more expensive, firms raise their prices to maintain profit margins, resulting in inflation.

Cost-Push Inflation Is Caused by