Speculation of Price Changes Tends To

question 36

Multiple Choice

Speculation of price changes tends to:

• A) have a destabilising effect on prices if the change is expected to be temporary
• B) be self- fulfilling
• C) have a stabilising effect on prices if the change is expected to be permanent
• D) have no actual effect on prices, as speculation does not cause any real changes

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Definitions:

Stagflation

A contraction, or stagnation, of a nation’s output accompanied by inflation in the price level.

Aggregate Demand

The sum of the need for all products and services in an economy at a certain price level during a specific time frame.

Unemployment

The condition of someone of working age who is willing to work, but unable to find employment.

Supply-Side Economics

An economic theory that advocates reducing taxes and regulations to stimulate production and economic growth.