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Economics (AS & A Level) · Oct / Nov 2021 · Paper 12 · Question 24

9708Price stability

There is an increase in indirect taxes. What will be the impact on demand-pull inflation and on cost-push inflation?

  1. Ademand-pull inflation: fall; cost-push inflation: fall
  2. Bdemand-pull inflation: fall; cost-push inflation: rise
  3. Cdemand-pull inflation: rise; cost-push inflation: fall
  4. Ddemand-pull inflation: rise; cost-push inflation: rise

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Correct answer: B. demand-pull inflation: fall; cost-push inflation: rise

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