According to the demand pull theory, which is responsible for inflation?

a. producers raise prices to meet existing demand
b. the economy is in a wage price spiral
c. too much money is in circulation
d. Demand for goods and services exceeds existing supply


Ans: d. Demand for goods and services exceeds existing supply

Economics

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A) A B) B C) C D) D

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The owner of the local "Fatty Foods" chain of restaurants is thinking about retiring. He has two options: he can hire salaried managers for his stores or franchise them to local entrepreneurs. If the owner believes that there are high costs to monitoring the stores after he retires, what should he do?

a. Let the stores stay company stores b. Sell them off as franchises c. Shut down the business completely d. Never retire

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Why do firms engage in the activity of production?

A. to develop a supply schedule B. to participate in the circular flow C. to acquire profits D. to help society advance technologically

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Refer to the market for loanable funds, as shown in the above graph. A decline in the interest rate is likely to:

A. Lower capital investment B. Increase the quantity of loanable funds demanded C. Come about when there is a shortage of loanable funds D. Result from an increase in the desire of firms to borrow funds

Economics