CIMA BA1 · Chapter 2 · Question 3 of 10
A sharp rise in the world price of imported oil causes the general price level in an economy to increase. This is best described as:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Cost-push inflation
Explanation
Cost-push inflation arises when increases in costs of production (here imported energy) are passed on to customers as higher prices. Demand-pull inflation results from aggregate demand exceeding the economy's productive capacity. Deflation is a falling price level and disinflation is a falling rate of inflation.
More Macroeconomic policy and the business cycle MCQs
- Q5The original Phillips curve suggested that:
- Q6Which of the following is most likely to be observed during the recession phase of the business (trade) cycle?
- Q7Which of the following is an example of an automatic stabiliser?
- Q8A central bank raises its policy interest rate. Assuming other things remain equal, which of the following is the most likely consequence?
- Q9Which of the following is an example of a supply-side policy?