Which of the Following Is a Correct Statement

question 1

Multiple Choice

Which of the following is a correct statement?

• A) It is relatively easy to distinguish between cost-push and demand-pull inflation even if you don't know the source of the inflation.
• B) A supply shock will cause a variation of demand-pull inflation that can lead to hyperinflation.
• C) Demand-pull inflation will continue so long as there is excess total spending in the economy.
• D) Demand-pull inflation is usually accompanied by higher unemployment rates.

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Definitions:

Monopoly Power

The degree of power held by a singular entity to control prices or exclude competition within a market.

Natural Monopoly

A market condition where a single firm can supply a good or service to an entire market more efficiently than multiple firms due to high fixed or startup costs.

Economies Of Scale

The cost advantage that arises with increased output of a product, as fixed costs are spread over more units of production, reducing the cost per unit.

Diseconomies Of Scale

An increase in average total cost as output rises.