"Budget Deficits Are Inflationary

question 76

Multiple Choice

"Budget deficits are inflationary." The truth of this statement depends on

• A)aggregate demand in the economy.
• B)the shape of the aggregate supply curve.
• C)the size of the national debt.
• D)existing debt as a percentage of GDP.

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Definitions:

Marginal Product

The additional output that can be produced by adding one more unit of a specific input, holding all other inputs constant.

Variable Input

An input in the production process that can be adjusted in the short term, such as labor or raw materials, to change the output level.

Total Output

The combined quantity of production or services produced by an entity in a given period.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance.