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Unilorin Post-UTME Economics 2024 (Model questions) Question 6

Question 6

Money and Inflation

Cost −push inflation might start with ________

  1. A.a rise in money wage rates
  2. B.an increase in government purchases
  3. C.an increase in the quantity of money
  4. D.a fall in the prices of raw materials
Show the answer and explanation

Answer: A (a rise in money wage rates)

Explanation

Cost-push inflation comes from rising production costs such as wages. More government spending or more money in circulation causes demand-pull inflation.