Answer to Question #135081 in Macroeconomics for December

Question

Which of the following best describes a difference between demand-pull inflation and cost-push
inflation?
[1] Demand-pull inflation occurs when there is a shortage in aggregate demand, while cost-
push inflation is the upward pressure on the general price level due to rising cost of
production.
[2] Cost-push inflation can be caused by increases in the cost of wages and intermediate
goods, while demand-pull can be caused by increase in exports.
[3] Demand-pull inflation is triggered by increases in the cost of production, while cost-push
inflation occurs when the aggregate demand for goods and services increases while
aggregate supply remains unchanged.
[4] There is no difference between demand-pull inflation and cost-push inflation as they are
triggered by the same sources.

Answer 1

[2] Cost-push inflation can be caused by increases in the cost of wages and intermediate goods, while demand-pull can be caused by increase in exports.