Question
Which of the following will likely lead to cost-push inflation? Select the two correct answers.(1 point)
Responses
An ongoing war causes government spending to nearly double in quantity.
An ongoing war causes government spending to nearly double in quantity.
Consumers become more comfortable with debt, increasing their spending as they take on more loans.
Consumers become more comfortable with debt, increasing their spending as they take on more loans.
An increase in the price of oil has reduced supply of all goods and services that use oil as an input.
An increase in the price of oil has reduced supply of all goods and services that use oil as an input.
A tornado destroys factories and lowers supply levels throughout the economy.
A tornado destroys factories and lowers supply levels throughout the economy.
Exports increase dramatically after a relative drop in price.
Responses
An ongoing war causes government spending to nearly double in quantity.
An ongoing war causes government spending to nearly double in quantity.
Consumers become more comfortable with debt, increasing their spending as they take on more loans.
Consumers become more comfortable with debt, increasing their spending as they take on more loans.
An increase in the price of oil has reduced supply of all goods and services that use oil as an input.
An increase in the price of oil has reduced supply of all goods and services that use oil as an input.
A tornado destroys factories and lowers supply levels throughout the economy.
A tornado destroys factories and lowers supply levels throughout the economy.
Exports increase dramatically after a relative drop in price.
Answers
GPT-4o mini
Cost-push inflation occurs when the overall price levels rise due to an increase in the costs of production and a decrease in the supply of goods and services. The two correct answers that are likely to lead to cost-push inflation are:
1. **An increase in the price of oil has reduced supply of all goods and services that use oil as an input.**
2. **A tornado destroys factories and lowers supply levels throughout the economy.**
Both of these scenarios lead to an increase in production costs and a decrease in supply, contributing to cost-push inflation.
1. **An increase in the price of oil has reduced supply of all goods and services that use oil as an input.**
2. **A tornado destroys factories and lowers supply levels throughout the economy.**
Both of these scenarios lead to an increase in production costs and a decrease in supply, contributing to cost-push inflation.