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How to explain Cost-Push Inflation?

帮考网校2020-10-22 16:10:43
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Cost-push inflation is a type of inflation that occurs when the cost of production increases, leading to an increase in the prices of goods and services. This type of inflation is caused by factors such as an increase in the cost of raw materials, an increase in wages, an increase in taxes, or an increase in the cost of energy.

For example, if the cost of oil increases, transportation costs increase, which can lead to an increase in the cost of goods and services. Similarly, if the minimum wage increases, the cost of labor increases, which can lead to an increase in the cost of goods and services.

Cost-push inflation is different from demand-pull inflation, which occurs when there is an increase in demand for goods and services that outstrips the supply, leading to an increase in prices. In cost-push inflation, the increase in prices is caused by an increase in the cost of production, rather than an increase in demand.

Overall, cost-push inflation can be a significant challenge for businesses and consumers, as it can lead to higher prices and reduced purchasing power. It can also be difficult to control, as it is often caused by external factors beyond the control of businesses or policymakers.
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