If Cost-Push Inflation Occurs and the Government Adopts a Hands-Off

question 113

Multiple Choice

If cost-push inflation occurs and the government adopts a hands-off policy approach, then, according to the simple extended AD-AS model, in the long run the economy will

• A) get back to where it started from.
• B) get stuck with high unemployment.
• C) experience an inflationary spiral.
• D) have a higher price level.

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Definitions:

Separate Return

A tax return filed by an individual or entity separately from other entities or individuals, particularly in the context of married couples filing separately.

Mutual Ownership

A type of ownership where two or more parties jointly own an asset or a company, sharing in its risks and profits.

Ownership Pattern

The distribution of ownership in a company, detailing the different types of shareholders and their respective shares.

Amortization Of Goodwill

The process of gradually writing off the initial cost of goodwill over a period, reflecting the diminution of the asset's value over time.