If the Government Adopts a Hands-Off Approach to Cost-Push Inflation

question 133

Multiple Choice

If the government adopts a hands-off approach to cost-push inflation in the economy, then in the short run there is likely to be

• A) a rise in real output.
• B) a fall in unemployment.
• C) an inflationary spiral.
• D) a recession.

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Definitions:

Small Denomination

Refers to currency or financial instruments that are issued in low nominal values, making them accessible for small transactions or savings.

Large Denomination

A reference to currency or securities with a high nominal value, typically used for large transactions or as a store of value.

Savings Deposit

A bank deposit that typically earns interest and is intended for holding money that is not expected to be spent immediately.

M1

M1 is a category of the money supply that includes all physical money such as coins and currency, as well as demand deposits and other liquid assets held by the central bank.