alleryStart learning →What triggers cost-push inflation?
ABuyers holding more money than the available goods require
BIncreases in production costs such as materials and wages
CA fall in the number of buyers active in the marketplace
DA rise in the quantity of goods that suppliers make available
Answer & Solution
Correct answer: B. Increases in production costs such as materials and wages
1. Cost-push inflation is triggered by increases in production costs.
2. Expenses for materials and wages are the examples of those costs.
3. Those increases push up the prices of final goods and services.
4. Buyers holding more money than the goods require is demand-pull inflation instead.
5. A fall in buyers or a rise in supply would ease prices rather than raise them.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 1 "Understanding Economic Systems and Business", section 1.4 Macroeconomics: The Big Picture_
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