Economics (AS & A Level) · Oct / Nov 2022 · Paper 11 · Question 19

Assuming the demand for oil is price-inelastic, what will be the effect on demand-pull inflation and on cost-push inflation in an oil-importing country of an increase in the world price of oil?

1. Aeffect on demand-pull inflation increase; effect on cost-push inflation increase
2. Beffect on demand-pull inflation increase; effect on cost-push inflation reduce
3. Ceffect on demand-pull inflation reduce; effect on cost-push inflation increase
4. Deffect on demand-pull inflation reduce; effect on cost-push inflation reduce

As printed in the paper