A PERSISTENCE RISE IN THE PRICES OF INPUTS WILL LEAD TO

• A. cost push inflation ✓
• B. demand pull inflation
• C. hyperinflation
• D. stagflation

The answer to the question is: A. cost push inflation

Cost-push inflation occurs when the cost of production increases, leading to an increase in the prices of goods and services. This type of inflation is caused by a rise in the prices of inputs, such as labor, raw materials, and energy. When the cost of producing goods and services goes up, producers often pass these increased costs on to consumers in the form of higher prices. This can lead to a general increase in the overall price level in an economy.

Cost-push inflation is often associated with supply-side factors, such as disruptions in the supply chain, increases in wages, or higher import prices. These factors can lead to a decrease in aggregate supply, causing prices to rise. In this scenario, the economy experiences both higher prices and lower output, which can result in stagflation—a situation characterized by high inflation and high unemployment.

In summary, a persistent rise in the prices of inputs will lead to cost-push inflation, as producers raise prices to offset increased production costs.