Question
Which of the following will likely lead to cost-push inflation? Select the two correct answers.(1 point)
Responses
Exports increase dramatically after a relative drop in price.
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 ongoing war causes government spending to nearly double in quantity.
A tornado destroys factories and lowers supply levels throughout the economy.
Responses
Exports increase dramatically after a relative drop in price.
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 ongoing war causes government spending to nearly double in quantity.
A tornado destroys factories and lowers supply levels throughout the economy.
Answers
GPT-4o mini
Cost-push inflation occurs when the overall price levels rise due to increases in the costs of production and decreases in the supply of goods and services. Based on the options provided, the two correct answers that would likely 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 scenarios involve increased production costs and reduced supply, leading to a rise in prices.
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 scenarios involve increased production costs and reduced supply, leading to a rise in prices.