PRC-3 · Chapter 18 · Question 20 of 33
A massive global crisis triples the price of crude oil. Manufacturers are forced to drastically raise the retail prices of all their goods to cover these massive new energy costs. This triggers:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Cost-push inflation
Explanation
Cost-push inflation is driven by a decrease in aggregate supply due to an increase in production costs (such as expensive imported energy), pushing prices up.
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