A Specific Reduction in Government Spending Will Dampen Demand-Pull Inflation

question 17

Multiple Choice

A specific reduction in government spending will dampen demand-pull inflation by a greater amount, the:

• A)smaller is the economy's MPC.
• B)flatter is the economy's aggregate supply curve.
• C)smaller is the economy's MPS.
• D)less the economy's built-in stability.

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Definitions:

Sales Revenue

Sales revenue refers to the income received from the sale of goods or services before any costs or expenses are deducted, serving as a primary source of business income.

Retail Inventory Method

An accounting technique used by retailers to estimate inventory costs by applying a consistent gross margin percentage to the retail price of the goods.

Shrinkage

The reduction in inventory mainly due to shoplifting, employee theft, or other errors.

Physical Count

The process of manually counting and verifying the actual inventory in a business at a specific point in time.