At Full Employment, an Increase in the Quantity of Money

question 87

Multiple Choice

At full employment, an increase in the quantity of money (ceteris paribus) can start

• A)demand-pull inflation, as can an increase in government expenditure.
• B)demand-pull inflation, but an increase in government expenditure cannot.
• C)cost-push inflation, as can an increase in government expenditure.
• D)cost-push inflation, but an increase in government expenditure cannot.
• E)demand-pull and a cost-push inflation, as can an increase in government expenditure.

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Definitions:

Alternative Technologies

Different or new technologies that can be used as substitutes for existing ones, often considered in the context of improving efficiency or reducing environmental impact.

Market Price

The going rate at which a commodity or service is offered for buying or selling in a trading environment.

Technologies of Production

The methods and processes used to produce goods and services, incorporating both the tools and techniques involved.

Prices of Inputs

This term describes the cost of resources used in the production of goods and services, such as raw materials, labor, and machinery.