Pure Inflation Occurs When

question 56

Multiple Choice

Pure inflation occurs when:

• A) the GDP deflator prices rise faster than the CPI prices.
• B) all prices and nominal wages rise by the same percentage.
• C) all prices rise faster than nominal wages.
• D) nominal wages rise faster than all prices.
• E) the GDP deflator and consumer price index rise by the same percentage.

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Definitions:

Cooperative Behavior

Actions taken by individuals or organizations that are designed to benefit others or achieve a common goal through collaboration.

Product Differentiation

Product differentiation is a strategy businesses use to make their products unique and stand out from competitors, often through design, quality, or features.

Price War

A competitive business strategy in which companies repeatedly cut prices to undercut competitors, often resulting in reduced profit margins for everyone involved.

Tacit Collusion

An unspoken, informal agreement among competitors to avoid certain competitive practices, like price wars, to keep prices at a certain level or to divide markets.