Demand-Pull Inflation Results from Continually Increasing the Quantity of Money

question 71

Multiple Choice

Demand-pull inflation results from continually increasing the quantity of money, which leads to continually

• A) decreasing aggregate demand.
• B) decreasing potential GDP.
• C) increasing aggregate supply.
• D) increasing potential GDP.
• E) increasing aggregate demand.

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Definitions:

Dividend Growth Model

A method of valuing a company's stock price by using predicted dividends and discounting them back to present value.

Cost of Equity

The return that investors expect for investing in a company's equity, often calculated using models like the Capital Asset Pricing Model (CAPM).

Market Risk Premium

Slope of the Security Market Line; the difference between the expected return on a market portfolio and the risk-free rate.

Cost of Equity

The return a company requires to decide if an investment meets capital return requirements and can finance its operations.