Undesired inventory depletion results in demand-pull inflation.
Answer the following statement true (T) or false (F)
True
Since spending exceeds production, inventory levels fall, which leads to an increase in production with the trade-off of higher inflation.
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Suppose the market supply for good X is given by QXS = -100 + 5PX. If the equilibrium price of X is $100 per unit then producer surplus is
A. $1,600. B. $16,000. C. $400. D. none of the statements associated with this question are correct.
If commercial banks are maintaining a 5 percent reserve/deposit ratio and the Fed lowers the required reserve ratio to 3 percent, then banks may ________ their loans and deposits, and the money supply may ________.
A. decrease; decrease B. increase; increase C. decrease; increase D. increase; decrease
Which of the following statements is most accurate about fiscal policy since the end of the Great Recession?
A. Cyclically adjusted deficits that occurred in 2009 eventually gave way to cyclically adjusted surpluses as the economy recovered. B. The cyclically adjusted budget remained in deficit, but those deficits became smaller from 2009 to 2015, so fiscal policy became contractionary. C. The cyclically adjusted budget remained in deficit and those deficits became smaller from 2009 to 2015, but fiscal policy remained expansionary. D. Cyclically adjusted deficits rose steadily from 2009 to 2015, so fiscal policy became increasingly expansionary.
Since 2010, the federal funds rate has been well below the rate suggested by the Taylor rule. A likely explanation for the discrepancy is that ________
A) the Fed's dual mandate prevents a close reliance on the Taylor rule B) policy makers decided that instability of the coefficients prevents the Taylor rule from having any role in policy decisions C) in the past, adherence to the Taylor rule led to policy mistakes D) all of the above E) none of the above