What are the effects of cost-push inflation on real output?
What will be an ideal response?
Unexpected changes in the cost of key resources for the economy will increase the cost of production. As the price level rises, the quantity demanded of goods and services falls. Thus, cost-push inflation reduces real output and contributes to increased unemployment.
You might also like to view...
Consider a U-shaped long-run average cost curve that has a minimum efficient scale at 6,000 units of output. In this case, this industry would be
A) an oligopoly if the market quantity demanded is 18,000 units. B) perfectly competitive if the market quantity demanded is 20,000 units. C) an oligopoly if the four-firm concentration ratio is more than 10 percent. D) monopolistically competitive if the market quantity demanded is 12,000 units.
Some superstar athletes in the sports industry earn very high levels of income relative to other occupations, and over time the wage differential has been increasing. What could have caused this?
A) The market power of athletes' unions has increased. B) Technological advances such as cable television has increased the demand for sports entertainment. C) The supply of star athletes has decreased. D) The supply of star athletes has increased due to college athletic programs.
A rightward shift of the demand curve will lead to an
A) increase in equilibrium price. B) excess demand at the old equilibrium price. C) increase in quantity supplied. D) All of the above.
Another term for "economic models" is
A) economic systems. B) economic theories. C) economic science. D) economic institutions.