Question
What is the likely consequence of the government failing to intervene when cost-push inflation arises?
Multiple choice question.
Expanding aggregate demand
A lingering recession
Even higher inflation
A positive GDP gap
Multiple choice question.
Expanding aggregate demand
A lingering recession
Even higher inflation
A positive GDP gap
Answers
GPT-4o mini
The likely consequence of the government failing to intervene when cost-push inflation arises is:
**Even higher inflation**
Cost-push inflation occurs when the cost of production increases, leading producers to raise prices to maintain profit margins. Without government intervention, the economy may experience sustained higher prices, potentially leading to a wage-price spiral and further inflationary pressures.
**Even higher inflation**
Cost-push inflation occurs when the cost of production increases, leading producers to raise prices to maintain profit margins. Without government intervention, the economy may experience sustained higher prices, potentially leading to a wage-price spiral and further inflationary pressures.