Cost-push inflation occurs when _______?

A. production cost is high
B. government embarks on deficits financing
C. factors decrease
D. there is too much in circulation

Correct Answer:

Option A – production cost is high

Explanation

Cost-push inflation occurs when an increase in cost of production are passed on to consumers in the form of a high price for the goods and services on sale. The price of goods is pushed up by rising costs.