At Full Employment an Increase in the Quantity of Money

question 55

Multiple Choice

At full employment an increase in the quantity of money (ceteris paribus) can create a

• A)demand-pull inflation, as can an increase in government expenditure.
• B)demand-pull inflation, but an increase in government expenditure cannot.
• C)cost-push inflation, as can an increase in government expenditure.
• D)cost-push inflation, but an increase in government expenditure cannot.
• E)demand-pull and a cost-push inflation, as can an increase in government expenditure.

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Definitions:

Straight-line Method

A method of calculating depreciation of an asset, dividing the difference between its cost and salvage value by the total number of years it is expected to be in use.

Salvage Value

The expected financial return on an asset at the time of its disposal after its serviceable life has concluded.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.

Real Estate

Property consisting of land and the buildings on it, along with its natural resources, involved in buying, selling, or renting land, buildings, or housing.