Inflation in the Short Run Is Most Likely to Result

question 69

Multiple Choice

Inflation in the short run is most likely to result from a(n)

• A) increase in aggregate demand or aggregate supply.
• B) decrease in aggregate demand or aggregate supply.
• C) increase in aggregate demand or a decrease in aggregate supply.
• D) decrease in aggregate demand or an increase in aggregate supply.

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Definitions:

Labor Productivity

measures the output produced per unit of labor input, indicating how efficiently labor is used in the production process.

Price Level

A measure of the average prices of goods and services in an economy over a period of time.

Wage Rate

The standard amount of compensation individuals receive in exchange for performing a certain task or job per unit of time.

Monetary Policy

The process by which a central bank, currency board, or equivalent regulatory committee manages the supply of money and interest rates to achieve macroeconomic objectives such as controlling inflation, consumption, growth, and liquidity.