It Is Frequently Difficult to Separate Supply-Side from Demand-Side Inflation

question 51

Multiple Choice

It is frequently difficult to separate supply-side from demand-side inflation because

• A) they are ultimately caused by the same forces.
• B) resource price increases may be responsible for the initial price level increase, but further price level increases result from the Fed's efforts to reduce the resulting unemployment.
• C) in cases where there is too much aggregate spending, the economy has excess capacity and therefore has a horizontal aggregate supply curve.
• D) both kinds of inflation lead to a rapidly increasing total real output.
• E) the resulting price level effects of each offset one another.

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Definitions:

Repressor

A protein that binds to specific DNA sequences, preventing the transcription of genetic information from DNA to mRNA.

Acetyl Groups

Organic functional groups consisting of a methyl group single-bonded to a carbonyl. The formula is CH3CO-, significant in metabolic processes.

Histones

Proteins that package and order the DNA into structural units called nucleosomes, playing a critical role in gene regulation.

Transcription

The process of synthesizing RNA from a DNA template, a key step in gene expression and protein production.