Economics • Economic BasicsMedium
How does 'Cost-Push Inflation' typically originate within an aggregate market structure?
A. Excessive growth in aggregate consumer demand
B. Expansionary monetary policy by the central bank
C. Increases in the cost of wages and raw materials✓ Correct Answer
D. Sudden surges in government fiscal expenditure
💡 Solution & Explanation
Cost-push inflation occurs when overall prices increase due to rises in the cost of wages and raw materials, shifting the aggregate supply curve to the left. Demand-pull inflation arises instead when aggregate demand for goods and services outpaces aggregate supply. Supply chain bottlenecks often trigger cost-push pressures in developing economies.
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