Cost-push inflation can be started by
A)a decrease in the money wage rate.
B)an increase in the money prices of raw materials.
C)an increase in the quantity of money.
D)an increase in government expenditure on goods and services.
E)a decrease in government expenditure on goods and services.

Question

Quizplus · Accepted Answer

Cost-push inflation is caused by an increase in the cost of production, typically due to an increase in the prices of raw materials or other inputs. This can cause firms to raise prices to maintain their profit margins, leading to inflation. Therefore, an increase in the money prices of raw materials would be the best choice to start cost-push inflation. The other options are unlikely to cause cost-push inflation: A decrease in the money wage rate would reduce costs and could actually lead to deflation; an increase in the quantity of money could cause demand-pull inflation but not cost-push inflation; and changes in government expenditure are unrelated to the production costs faced by businesses.

Cost-Push Inflation Can Be Started by