Question

A situation of price rise caused by decreases in supply due to increase in cost of production is known as __________.

• A. stagflation
• B. deflation
• C. cost-push inflation
• D. inflation

Answer 1

Answer: (C)

cost-push inflation

Cost push inflation is an economic situation where the general price level in the economy for all the relevant goods and services has a constant appreciable rise over a considerable period of time due to continuous rise in the factor cost of the commodities in the economy. In cost push inflation, supply of the goods and services decreases due to increase in their cost of production.