When Does Cost Push In?ation Occur in an Economy

question 18

Multiple Choice

When does cost push in?ation occur in an economy?

• A) When a fall in aggregate demand leads to an increase in overall prices.
• B) When a rise in aggregate supply leads to an increase in overall prices.
• C) When a rise in aggregate demand leads to an increase in overall prices.
• D) When a fall in aggregate supply leads to an increase in overall prices.

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Definitions:

Buyer

An individual or entity that purchases goods or services for personal use, resale, or production.

Efficiency Loss

The reduction in economic efficiency that occurs typically due to market distortions such as taxes, subsidies, tariffs, or monopolies, leading to an allocation that is not welfare-optimal.

Excise Tax

A tax on the manufacturing, sale, or consumption of a particular good or service within a country.

Supply Curve

A graphical representation showing the relationship between the price of a good or service and the quantity of that good or service that suppliers are willing and able to provide at each price level.