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Cost-push inflation is primarily caused by:

easy Q2 of 15
Economic Awareness - Sectors of Indian Economy
Cost-push inflation is primarily caused by:
AExcess aggregate demand in the economy
BIncrease in wages and raw material prices
CExpansionary fiscal policy
DTechnological advancements reducing production costs
Step-by-Step Solution

  1. Step 1: Understand cost-push inflation

    Cost-push inflation arises when rising production costs push prices upward.

  2. Step 2: Analyze options

    Excess demand causes demand-pull inflation. Expansionary fiscal policy increases demand, not costs. Technological advancements reduce costs, lowering inflation.

  3. Final Answer:

    Increase in wages and raw material prices → Option B

  4. Quick Check:

    Cost-push inflation = rising production costs ✅
Quick Trick: Cost-push = rising costs push prices up.
Common Mistakes:
  • Mixing cost-push with demand-pull inflation causes.
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