Explore BrainMass
Share

Cost-Push Inflation

This content was STOLEN from BrainMass.com - View the original, and get the solution, here!

Do we use the price index system?

© BrainMass Inc. brainmass.com September 19, 2018, 4:31 pm ad1c9bdddf - https://brainmass.com/economics/inflation/cost-push-inflation-133697

Solution Preview

In economics, inflation is an increase in the general level of prices of a given kind. General inflation is referred to as a rise in the general level of prices.

Cost-Push Inflation
The text "Economics" (2nd Edition) by Parkin and Bade gives the following explanation for cost-push inflation:

"Inflation can result from a decrease in aggregate supply. The two main sources of decrease in aggregate supply are

* An increase in wage rates
* An increase in the prices of raw materials

These sources of a decrease in aggregate supply operate by increasing costs, and the ...

Solution Summary

Cost-Push Inflation is highlighted.

$2.19