'Cost-Push Inflation' Can Be Caused By

question 51

Multiple Choice

'Cost-push inflation' can be caused by:

• A)a high growth rate in real wages.
• B)an increase in aggregate demand, which pushes prices higher.
• C)an increase in aggregate supply, which pushes prices higher.
• D)growth in aggregate demand not keeping up with the growth in aggregate supply.

---

Definitions:

Labour Rate Variance

The difference between the actual cost of labor and the expected (standard) cost, indicating efficiency in labor utilization.

Variable Overhead Efficiency Variance

The difference between the actual hours worked to produce an item and the standard hours expected, multiplied by the variable overhead rate.

Direct Labour Efficiency Variance

The difference between the expected hours to produce a specific number of units and the actual hours used.

Direct Material Used

Direct material used involves the consumption of raw materials that are transformed into and directly identifiable with the finished product in the manufacturing process.