A Demand- Pull Inflation Spiral Results When

question 64

Multiple Choice

A demand- pull inflation spiral results when

• A) the economy experiences a one- time jump in the price level.
• B) aggregate demand increases, the Federal Reserve does not increase the quantity of money, and so the economy corrects the resulting inflationary gap on its own.
• C) aggregate demand increases and the economy corrects the resulting inflationary gap, but aggregate demand continues to increase because the Federal Reserve continues to increase the quantity of money.
• D) aggregate supply decreases, the Federal Reserve corrects the resulting recessionary gap by increasing the quantity of money and the supply shocks then stop.

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Definitions:

ATC Curve

In economics, the Average Total Cost curve is a graphical representation that shows the per-unit cost of production (total cost divided by the quantity produced) at different levels of output.

ATC Curve

The ATC Curve, or Average Total Cost curve, represents the average cost per unit of output, calculated by dividing total cost by the quantity of output produced.

AVC Curve

Short for average variable cost curve, it represents the variable cost per unit of output.

Marginal Cost

Marginal Cost is the cost incurred to produce one additional unit of a product or service, crucial for decision-making on production levels and pricing strategies.