JAMB Economics 2009 Objective — Question 31

Question 31 of 50 from the Joint Admissions and Matriculation Board (JAMB) Economics 2009 Objective paper, with the correct answer and a full explanation.

Cost-push inflation occurs when

A. production cost is highCorrect
B. factor prices decrease
C. there is too much money in circulation
D. government embarks on deficit financing

Explanation

When production cost is high, there will be a pressure on the producer to increase prices of his products. This is called cost push inflation if it cuts across firms and its sustained.

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