The Initial Factors That Can Create a Cost- Push Inflation

question 126

Multiple Choice

The initial factors that can create a cost- push inflation do NOT include

• A) increases in the money prices of raw materials.
• B) increases in the quantity of money.
• C) increases in money wage rates.
• D) None of the above answers is correct because all of the above could be the initial cause of a cost- push inflation.

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Definitions:

Inferior Good

A type of product for which demand decreases as the income of the consumer increases.

Cross Elasticity

Cross elasticity of demand measures the responsiveness of the demand for a good to a change in the price of another good, identifying substitute or complementary relationships.

Quantity Demanded

The total amount of goods or services that consumers are willing and able to buy at a specific price level, at a given point in time.

Normal Good

A type of good for which demand increases as the income of consumers increases, and vice versa.