Question

Which factor caused higher oil prices to directly lead to inflation?

It increased demand for cars, leading to higher automobile prices.
Companies passed on production and transportation costs to consumers.
The government began to print more money.
Gas prices declined too quickly, leading to oversupply

Answer 1

"Companies passed on production and transportation costs to consumers."

Explanation: higher oil prices raise input costs (fuel, transport, raw materials), which firms often pass through as higher consumer prices — a cost-push inflationary effect. The other choices are not the direct mechanism.