One Policy Dilemma Posed by Cost-Push Inflation Is That

question 3

Multiple Choice

One policy dilemma posed by cost-push inflation is that

• A)an increase in aggregate demand will increase inflation and the unemployment rate simultaneously.
• B)tax rates can be reduced without lowering tax revenues.
• C)the reduction of aggregate demand to restrain inflation will cause a further reduction in the real GDP.
• D)the adjustment of aggregate demand can neither increase real GDP nor reduce inflation.

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Definitions:

M2

M2 is a category of money supply that includes all elements of M1 (cash and checking deposits) as well as "near money," such as savings deposits, money market securities, and mutual funds.

M3

A gauge of monetary supply that encompasses M2, including cash, checking deposits, and near money that's easily converted, in addition to large-scale time deposits, institutional money market funds, and other sizeable liquid assets.

Check-Cashing Outlets

Businesses that offer to cash checks for a fee, often serving customers who do not have access to traditional banking services.

Banking Services

Various financial services provided by banks, including loans, deposits, money transfers, and account management.