Question

Cost-push inflation :

A. is caused by excessive total spending.
B. shifts the nation's production possibilities curve leftward.
C. moves the economy inward from its production possibilities curve.
D. is a mixed blessing because it has positive effects on real output and employment.

Answer 1

C. moves the economy inward from its production possibilities curve.

Step-by-step explanation:

Inflation is a persistent rise in general price levels.

One of the causes of inflation is cost- push inflation.

Cost push inflation is a general rise in price levels as a result of a rise in the cost of wages and raw materials. The rise of these costs makes production more expensive and as a result, production is reduced. This would lead to the production possibility curve moving inward.

The production possibility curve is a curve that shows the two combinations of goods and services that can be produced in an economy when all its resocurces are fully employed.

I hope my answer helps you