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JAMB Economics 1989 Question 30

Question 30

Money and Inflation

Cost-push inflation is caused by

  1. A.growth of government expenditure
  2. B.increase in factor prices
  3. C.increase in money supply
  4. D.hoarding.
Show the answer and explanation

Answer: B (increase in factor prices)

Explanation

Cost-push inflation starts when production costs such as wages and raw-material prices rise, and firms pass them on as higher prices.