cost-push inflation Flashcards
1
Q
cost-push inflation
A
changes in supply side of the economy
2
Q
why does it occur?
A
rising costs
3
Q
4 reasons why costs increase -
A
- increased wages
- imports
- to increase profits
- rise in indirect tax rates or a reduction in subsidies
4
Q
why do firms try and pass costs onto consumers?
A
maintain profit margins
competition in the market - difficult to pass on price rises and maintain sales
