Multiple choice

Which of the following are categories of inflation?

(A) Open and suppressed (B) Cost push (C) Demand pull

  1. Only (A) and (C)

  2. Only (A) and (B)

  3. Only (B) and (C)

  4. (A), (B) and (C)

  5. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Cost push inflation is inflation caused by an increase in prices of inputs like labour, raw material, etc. The increased price of the factors of production leads to a decreased supply of these goods.

Demand-pull Inflation is asserted to arise when aggregate demand in an economy outpaces aggregate supply. This is commonly described as "too much money chasing too few goods". 

Open and suppressed inflation are the conditions and not the types of inflation.

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