In a Demand- Pull Inflation, Money Wage Rates Rise Because

question 152

Multiple Choice

In a demand- pull inflation, money wage rates rise because

• A) a decrease in aggregate demand creates a labor shortage.
• B) an increase in aggregate demand creates a labor surplus.
• C) a decrease in aggregate demand creates a labor surplus.
• D) an increase in aggregate demand creates a labor shortage.

---

Definitions:

Marginal Revenue Product

The additional revenue generated from employing one more unit of a factor of production.

Wage Rate

The amount of money paid to an employee per unit of time or output, often expressed as an hourly rate.

Variable Input

An input whose quantity can be changed in the short run to adjust production levels, such as labor or raw materials.

Demand Curve

A visual depiction showing the inverse relationship between price and the quantity demanded of a good, under ceteris paribus conditions.