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12 November, 07:34

Cost-push inflation occurs when:

a) subsidies to businesses rise.

b) a supply shock shifts the short-run aggregate supply curve to the right.

c) total spending expands so much that equilibrium output exceeds full-employment output.

d) rising resource costs reduce short-run aggregate supply.

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Answers (1)
  1. 12 November, 10:05
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    Short answer D

    Labor costs could cause that type of inflation as well.

    C is eliminated because Push Cost Inflation is cost increase in what it takes to make a product.

    B is gone because it is really deflation not inflation. This answer implies a drop in price. Inflation is an increase in price.

    A subsides are an increase in capital. That will lower the price or keep it stable. Not A
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