Question

Which among the following are the cost-push causes of inflation?
$1$. Deficit financing
$2$. Increase in administrating prices
$3$. Increase in interest rates
$4$. Increase in population
$5$. Increase in oil prices
$6$. Mounting public expenditure
Select the correct answer using the code given.

• A. $2,3,5$ and $6$
• B. $2,3$ and $5$
• C. $3$ and $5$
• D. $1,2,4$ and $6$

Answer 1

Answer: (B)

$2,3$ and $5$

Cost-push inflation is a type of inflation caused by substantial increase in the cost of factors of production and important raw materials, which have no suitable alternatives is available. While, interest rate and administration prices are increase in cost of factors of production, petroleum is significant for industrialised economics, a large increase in its price can lead to the increase in the price of most products and cause inflation.