A Temporary Change in the Price Level Caused by Changes

question 17

Multiple Choice

A temporary change in the price level caused by changes in the business cycle is known as:

• A) demand-pull inflation.
• B) cost-push inflation.
• C) demand-push inflation.
• D) cost-pull inflation.

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Definitions:

Monetary Policy

A central bank’s changing of the money supply to influence interest rates and assist the economy in achieving price-level stability, full employment, and economic growth.

Trade Deficit

Occurs when a country's imports exceed its exports, leading to a negative balance of trade.

Individual Nations

Refers to sovereign states, each with its own government and political boundaries, recognized in international law.

Monetary Policy Independence

The ability of a country's central bank to implement its own monetary policy decisions without external influences.