Question

Which of the following is not a type of Inflation?
(A) Cost push
(B) Real wages
(C) Demand pull

• A. Only (A)
• B. Only (B)
• C. Only (C)
• D. Only (A) and (C)

Answer 1

Answer: (B)

Only (B)

Inflation: A situation of a steady and sustained rise in general prices is usually known as inflation. Inflation is state in which the value of money is falling, i.e. prices are rising.
Demand-Pull Inflation: It is that type of inflation which arises because aggregate demand for goods exceeds their supply. When demand persistently exceeds total supply of real goods and services at current prices, prices tend to rise. This results in inflation.
Cost-Push Inflation: When prices rise due to increase in the cost of production of goods, cost-push inflation results. Thus, cost-push inflation occurs when prices persistently rise because of growing factor costs. In India, the best example of cost push inflation is the substantial rise in prices of oil and petroleum products, CNG and LPG in the recent times.
Wage-Push Inflation: Wage-push inflation refers to a rising price level caused by rising money wage rates.