It Is Difficult to Eliminate a Constant Inflation

question 48

Multiple Choice

It is difficult to eliminate a constant inflation.A major reason it is so difficult is that inflationary expectations

• A)make it impossible to stop the rightward shift of the AD curve.
• B)make it impossible to reduce aggregate expenditure.
• C)keep shifting the AS curve upward.
• D)keep shifting the AS curve downward.
• E)cannot be influenced by monetary policy.

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Definitions:

Variable Cost

Costs that vary directly with the level of output or production, such as materials and labor.

EMV

Expected Monetary Value, a concept in decision making and risk management that calculates the average outcome when the future includes scenarios that may or may not happen.

Capacity Decision

Decisions related to the amount of resources needed by an organization to meet changing demands for its products.

Process-focused Shop

A production facility organized around processes to facilitate low-volume, high-variety production.