Question

Which of the following is / are responsible for Cost push Inflation?

• A. Black Money
• B. Increase in taxes
• C. Both a and b
• D. Neither a or b

Answer 1

The correct option is B Increase in taxes

Cost-push inflation occurs when overall prices increase (inflation) due to increases in the cost of wages and raw materials.
Increase in taxes will lead to increase in the cost of production. This cost will be transmitted down the supply chain, thus leading to Cost push inflation.