ACCA BT · Chapter 3 · Question 7 of 11
Rising wage costs and higher imported raw material prices are pushing up prices across an economy. What type of inflation is this?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Cost-push inflation
Explanation
Cost-push inflation arises when increases in costs of production, such as wages and imported materials, are passed on as higher prices. Demand-pull inflation is caused by excess aggregate demand relative to the economy's capacity. Structural unemployment is not a type of inflation.
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