Answer to Question #94448 in Macroeconomics for Nomthandazo

Question

which one of the following statement regarding cost-push inflation is correct
(1) cost-push inflation can be combated by restricting consumption spending
(2) the fight against cost-push inflation inevitably leads to higher unemployment
(3) cot-push inflation always has a positive impact on production and employment in the economy
(4) stagflation is synonymous to cost-push inflation

Answer 1

(4) stagflation is synonymous to cost-push inflation

The main reason for stagflation is a decrease in aggregate supply (i.e., inflation of production costs).