Question

Given below are two statements, one is labelled as Assertion (A) and other one labelled as Reason (R).
Assertion (A): Wage-Push Inflation and Profit-Push Inflation are two factors responsible for the Cost-Push Inflation.
Reason (R): Wage-push inflation takes place when higher wages are secured without a corresponding increase in labour productivity. In light of the above statements, choose the most appropriate answer from the options given below:

• A. Both (A) and (R) are correct and (R) is the correct explanation of (A).
• B. Both (A) and (R) are correct but (R) is NOT the correct explanation of (A).
• C. (A) is correct but (R) is not correct.
• D. (A) is not correct but (R) is correct.

Hint:

Cost-push inflation: Driven by rising wages (without productivity gains) or profit motives pushing up prices.

Answer 1

The Correct Option is A

Step 1: Cost-push inflation happens when input costs rise, forcing higher prices.
Step 2: Wage-push and profit-push are the two standard categories, so (A) is correct.
Step 3: Wages rising faster than productivity raises cost per unit, this is exactly wage-push inflation, so (R) is correct.
Step 4: (R) explains the mechanism behind one part of (A).
\[ \boxed{\text{Option (1): Both correct, (R) explains (A)}} \]