Cost pull inflation occurs when the:
A. business cycle becomes sporadic and unpredictable.
B. price of necessity goods increases suddenly.
C. price of a key input increases suddenly.
D. price level changes in response to changes in the business cycle.
Answer: C
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The analysis of Chapter 15 argues that the painfully slow recovery following the Great Recession, in which the accumulation of mistakes during the housing bubble are not being fully corrected, is explained by
A) the Fed's continued attempt to keep interest rates low and "help" the housing sector recover. B) the negative consequences of deficit policies that attempt to "stimulate" the economy. C) both of the above reasons. D) neither of the above reasons.
A perfectly competitive market is characterized by
A) high barriers to entry. B) firms that are price setters. C) firms facing a downward sloping demand curve. D) no restrictions on entry into the market.
Intertemporal choice theory is more consistent with ________
A) Keynesian theory than the permanent income hypothesis of Friedman B) the permanent income hypothesis than Keynesian theory C) Keynesian theory than the life-cycle hypothesis D) Keynesian theory than the Gini coefficient theory
One of the essential functions a bank performs is that of
A. Participating in the stock market. B. Purchasing government bonds. C. Creating money by lending required reserves. D. Transferring money from savers to borrowers.