What is cost push inflation, Microeconomics

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What is Cost Push Inflation

Cost Push Inflation :   When a cost of production (e.g. wages) enhances and firms put up prices to maintain profits. Cost increases may occur because wages have gone up or because raw material prices have enhanced. It is important not to muddle cost-push with demand-pull inflation. Cost-push inflation occurs when costs have risen independently of demand. 

 


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