--%>

Cost-push inflation

Describe cost-push inflation and its major source.

E

Expert

Verified

It refers to inflation due to a rise in the cost of production, which causes aggregate supply to fall. Beyond a point any rise in costs are included in the price at which producers are willing to sell goods. This is reflected in as shifting up; with demand (AD) unchanged it causes higher prices in equilibrium.

One major source is minimum wage laws being enacted. These laws cause wage bills to raise that area a major and unavoidable part of total production costs.

   Related Questions in Macroeconomics

  • Q : Supply factors in economic growth

    Briefly explain the four supply factors in economic growth?

  • Q : Is sale of scooter is national income

    Describe whether the sale of old scooter is comprised in national income?

  • Q : Difference on consumer willing to pay

    I have a problem in economics on Consumer Surplus-Difference consumer willing to pay and what actually pay. Please help me in the following question. The consumer surplus signifies to the difference among the: (i) Satisfaction of wealthy people and th

  • Q : What are the strength and weakness What

    What are the strength and weakness of using per capital national income? give explained answer for query

  • Q : Opportunity costs of consumption

    Individuals maximize the satisfaction whenever the marginal utilities of all goods are: (i) Precisely proportional to the consumer’s income. (ii) Maximized. (iii) Precisely proportional to the opportunity costs of consuming them. (iv) Equivalent

  • Q : Define Break Even point Define Break

    Define Break Even point? Elucidate with the help of saving function. Answer: Breakeven point is a point where consumption equals to income and saving is equivalent t

  • Q : McConnell Brue Flynn 19e What

    What relationship does the MPC bear to the size of the multiplier

  • Q : Difference between

    Elucidate the differences among the frictional, structural, and cyclical forms of unemployment.

  • Q : Interpreting Macroeconomic Conditions I

    I have a problem in an assignment which involves analyzing interest rates, the CPI(consumer price index) and wage rates as they impact the automotive and gaming (with an emphasis on casinos) industries. Analyze these indicators and prepare a 3-4 page report explaining

  • Q : Value of the net benefits Whenever

    Whenever consumers paid an amount for water which reflects the value of the net benefits they obtain from consuming it, water would outcome: (1) Maximum consumer excess. (2) Zero consumer excess. (3) Total revenue equivalent to variable cost. (4) Zero