PRC-3 · Chapter 18 · Question 12 of 33
A global crisis causes the price of imported raw oil and natural gas to triple. Domestic manufacturers are forced to radically increase the retail prices of their finished goods to cover these massive new energy costs. This triggers:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Cost-push inflation
Explanation
Cost-push inflation is driven by a decrease in aggregate supply due to rising production costs (like expensive imported energy or higher wages), which pushes prices up.
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