When a Cost-Push Inflation Starts

question 69

Multiple Choice

When a cost-push inflation starts

• A) the price level falls and the money wages rises.
• B) real GDP rises faster than the quantity of money.
• C) the short-run aggregate supply curve shifts rightward.
• D) the price level rises and real GDP decreases.

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Definitions:

Cost Behavior

The way in which a cost reacts to changes in the level of activity.

Fixed Cost

Costs that do not change with the level of production or output, remaining constant even as volume changes.

Relevant Range

The range of activity within which the assumptions about fixed and variable costs are valid. Beyond this range, cost behaviors may change.

Per Unit Basis

A method of cost allocation or measurement that divides a total by the number of units to find the cost per unit.