WAEC Economics 2016 Objective — Question 37

Question 37 of 50 from the West African Examinations Council (WAEC) Economics 2016 Objective paper, with the correct answer and a full explanation.

37. Cost-push inflation is likely to arise when (a) there is an increase in bank lending (b) there is an increase in subsidies (c) demand for higher wages is granted (d) there is a decrease in bank lending

A. there is an increase in bank lending
B. there is an increase in subsidies
C. demand for higher wages is grantedCorrect
D. there is a decrease in bank lending

Explanation

When demand for higher wages is granted, the cost of production will increase and this will lead to cost-push inflation.

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