With Mild Demand-Pull Inflation, the Economy's Output Level Would Tend

question 4

Multiple Choice

With mild demand-pull inflation, the economy's output level would tend to be

• A)pulled up by the increase in total spending.
• B)pulled down by the decrease in total spending.
• C)pulled up by the rising unemployment.
• D)pulled down by the rising unemployment.

---

Definitions:

Purchasing Power

The capability of a currency to buy goods or services, expressed as the quantity one unit can acquire.

Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, eroding purchasing power.

Hourly Wage

The rate of pay per hour for employment, used to calculate total earnings based on the number of hours worked.

Rates of Inflation

The percentage rate at which the general level of prices for goods and services is rising.