When the price of a key input increases suddenly, it causes:
A. cost push inflation.
B. the business cycle to become sporadic.
C. demand pull inflation.
D. the velocity of money to rise.
A. cost push inflation.
You might also like to view...
At a zero price, which of the following conditions is TRUE for an economic good?
A) Its quantity supplied exceeds its quantity demanded. B) Its quantity demanded exceeds its quantity supplied. C) Its quantity demanded equals its quantity supplied. D) Scarcity disappears.
During the period 2001-2004, the U.S. Federal Reserve lowered nominal interest rates on the dollar by more than the European Central Bank (ECB) did on the euro, a move that most market participants viewed as temporary. What was the effect on the dollar-euro exchange rate?
a. The dollar depreciated against the euro. b. The dollar appreciated against the euro. c. There was no change in the dollar-euro rate because expectations adjusted. d. There was no change in the dollar-euro rate because real interest rates were unchanged.
Government intervention can serve to stabilize the macro economy by
A. Regulating monopolies and encouraging the equitable distribution of output. B. Reducing inflation and encouraging economic growth. C. Reducing employment and encouraging economic growth. D. Reducing inflation and encouraging the equitable distribution of income.
Otis transfers $200 from his savings account to his money market fund. This transaction will
A. decrease M2 and increase M1. B. decrease M1 and increase M2. C. decrease both M1 and M2. D. leave M1 and M2 unchanged.