Economic Awareness - Sectors of Indian Economy
Cost-push inflation occurs due to:
Cost-push inflation occurs due to:
medium Q5 of 15
Step-by-Step Solution
Step 1: Understand cost-push inflation
Cost-push inflation arises when production costs increase, leading producers to raise prices.Step 2: Analyze options
Increase in production costs correctly identifies the cause. Increase in aggregate demand causes demand-pull inflation. Decrease in money supply generally reduces inflation. Government subsidies tend to lower costs, not increase them.Final Answer:
Increase in production costs → Option DQuick Check:
Cost-push inflation = rising production costs cause price rise ✅
Quick Trick: Cost-push = higher costs push prices up.
Common Mistakes:
- Confusing cost-push with demand-pull inflation causes.
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