In a Demand- Pull Inflation Brought About by Increases in the Quantity

question 24

Multiple Choice

In a demand- pull inflation brought about by increases in the quantity of money, real GDP might increase at times because

• A) real wages rise.
• B) real wages fall.
• C) money wages fall.
• D) tax rates decline.

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Definitions:

Expansionary Policy

A macroeconomic policy that aims to stimulate the economy by increasing government spending, decreasing taxes, or lowering interest rates to boost economic activity.

Anticipated Policy

Economic or governmental policies expected to be implemented in the future, which can influence current economic behaviors and decisions.

Wages

The compensation paid to employees for their labor, typically quantified as an hourly, daily, or piece-rate basis.

Price Level

A benchmark for assessing the average current prices of a vast variety of goods and services produced within the economy.