In a Demand-Pull Inflation Brought About by Increases in the Quantity

question 261

Multiple Choice

In a demand-pull inflation brought about by increases in the quantity of money, real GDP might increase temporarily because

• A) tax rates decline.
• B) real wages fall.
• C) money wages fall.
• D) real wages rise.

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Definitions:

Short Run

A period in which at least one input (e.g., capital) is fixed and cannot be changed.

Long Run

A period of time in economics during which all factors of production and costs are variable, allowing for full adjustment to change.

Profit-Maximizing

The approach taken by a corporation to find the pricing and production levels that lead to the greatest earnings.

Loss-Minimizing

A strategy or condition in which a firm seeks to minimize its losses by operating at a production level where marginal cost equals marginal revenue.