Demand-Pull Inflation Could Start with

question 232

Multiple Choice

Demand-pull inflation could start with

• A) an increase in government expenditure followed by an increase in the money wage rate.
• B) an increase in the quantity of money followed by a decrease in the money wage rate.
• C) a rise in prices of raw materials followed by an increase in the quantity of money.
• D) a decrease in exports followed by a decrease in the quantity of money.

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Definitions:

Income Tax

A tax imposed by a government on the financial income generated by individuals or entities within its jurisdiction.

Plant Capacity

The maximum level of output that a company can sustain to produce in a given period under normal conditions.

Opportunity Cost

The cost of foregoing the next best alternative when making a decision, representing the benefits one misses out on when choosing one option over another.

Sunk Cost

A cost that has already been incurred and cannot be recovered.