Inflation Inertia Refers to the Idea That Inflation

question 92

Multiple Choice

Inflation inertia refers to the idea that inflation:

• A) is always present in economies.
• B) keeps on going unless something acts to stop it.
• C) cannot be reduced unless unemployment is increased.
• D) can be generated by either demand-pull or cost-push forces.

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Definitions:

Activity Level

A measure of the volume of production or operations, often influencing variable costs and capacity planning.

Fixed Manufacturing Overhead

The consistent, non-variable costs incurred during the manufacturing process, not directly tied to production levels.

Volume Variance

The difference between the budgeted and actual volume of production, affecting fixed costs allocation.

Machine-Hours

A unit of measure representing the operation time of a machine, often used in allocating manufacturing costs based on machine usage.