Which scenario is an example of cost-push inflation?

consumers have more money to buy cars, and the prices of cars and car parts rise as a result.

an increase in workers’ wages raises the production cost of cars, and car prices rise as a result.

the demand for cars falls as consumers have less disposable income, and car prices fall as a result.

a government bailout car manufacturers lower their costs, and car prices fall as a result.

B) An increase in workers’ wages raises the production cost of cars, and car prices rise as a result.

Explanation:

This shift can happen from an improvement in the cost of production or a decrease in the volume of production. An increase in the Aggregate Market curve effects Demand-Pull inflation. Rising prices create a request for higher wages, which directs to higher production costs and further higher pressure on prices.

The scenario that best fits an example of cost-push inflation is an increase in workers’ wages raises the production of cost of cars, and car prices as a result.

Cost-push inflation takes place when there is an increase in overall prices as a result of an increase in the cost of materials and wages. If the cost of production is very high it can decrease the amount of total production.

Also, if the demands of goods remain the same, the increases in overall prices from production are passed down to the consumers resulting in cost-push inflation

An overall increase in the cost of production is one major factor that causes cost-push inflation. For example, if the prices of materials used in production increase, it will lead to higher costs.

Some of the causes of cost-push inflation include

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