Which term describes inflation where the increased cost of goods is 'pushed' to others?

Which term describes inflation where the increased cost of goods is 'pushed' to others?

• A. Money Supply
• B. Opportunity Costs
• C. Exchange Rates
• D. Cost Push Inflation

Answer: (D)

The main idea here is how rising costs transmit through the economy. Cost-push inflation happens when higher costs for producing goods—like more expensive raw materials, energy, or wages—cause producers to raise prices to maintain profits. That means the effect is “pushed” onto consumers in the form of higher overall prices, even if demand hasn’t increased. This term specifically captures the mechanism of costs being passed along, which is why it’s the best fit for the description. Money supply is about how much money is available in the economy and can influence inflation, but it’s not describing the pass-through of rising production costs. Opportunity costs refer to the value of the next-best alternative forgone, not to price changes in goods. Exchange rates can affect prices by altering import costs, but the phrase in the question targets the direct transmission of rising costs through the economy, which is the essence of cost-push inflation.

The main idea here is how rising costs transmit through the economy. Cost-push inflation happens when higher costs for producing goods—like more expensive raw materials, energy, or wages—cause producers to raise prices to maintain profits. That means the effect is “pushed” onto consumers in the form of higher overall prices, even if demand hasn’t increased.

This term specifically captures the mechanism of costs being passed along, which is why it’s the best fit for the description. Money supply is about how much money is available in the economy and can influence inflation, but it’s not describing the pass-through of rising production costs. Opportunity costs refer to the value of the next-best alternative forgone, not to price changes in goods. Exchange rates can affect prices by altering import costs, but the phrase in the question targets the direct transmission of rising costs through the economy, which is the essence of cost-push inflation.