- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 11. Understanding Business Cycles
- Subject 7. Inflation
CFA Practice Question
All of the following occurrences could cause demand-pull inflation except an increase in ______.
A. government purchases and exports
B. money wage rates
C. the quantity of money
Explanation: An increase in money wage rates can cause cost-push inflation.
User Contributed Comments 4
| User | Comment |
|---|---|
| xjarl | Higher money wage rates increase the cost of labour, a factor of production, hence it's supply side which results in cost push inflation. |
| Sanghamitra | but higher money wage rate will also improve living conditions and increase demand for goods...so? i guess "wage" rate is the critical word. wage => cost |
| Schuyler3 | More money (increased wages) chasing the same amount of goods |
| gill15 | So I`m assuming anything that changes SRAS will be exceptions here....Input prices increasing, future price expectations, taxes, change in exchange rate |