According to the cost-push theory, what is responsible for inflation?
1. too much money is in circulation.
2.the economy is operating as though there was a war.
3. demand for goods and services exceeds existing supply.
4. producers raise prices to meet increased costs.

1. Too much money in circulation

Explanation:

The others have nothing to do with inflation.

4. Producers raise prices to meet increased costs.

Explanation:

In cost theory inflation can be defined as a percentage change in price levels of domestic and external goods, which will be used to average prices. Inflation is calculated using a variation measured by the consumer price index, which is the average retail price of a fixed market basket covering goods and services. In this case, inflation occurs when producers raise prices to meet higher costs, that is, it occurs when the amount of cost rises too quickly, above the speed of production.

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