Higher Prices and Price Increases Combined with Lower Real Output

question 23

Multiple Choice

Higher prices and price increases combined with lower real output and income,resulting from a major increase in input prices in the economy is called:

• A)deflation.
• B)inflation.
• C)stagflation.
• D)none of the above.

Apply the principle of marginal analysis to determine the optimal quantity of an activity or good.

Identify the relationship between marginal benefit, marginal cost, and the maximization of total benefits.

Assess the effect of external changes (such as price changes or external costs) on the perceived benefits and costs associated with an activity.

Distinguish between constant, increasing, and decreasing marginal costs and benefits.