An Increase in the Price Level Due to an Increase

question 106

Multiple Choice

An increase in the price level due to an increase in the price of oil

• A)creates stagflation in the short-run and will trigger a cost-push inflation.
• B)creates stagflation in the short-run and may trigger off a cost-push inflation.
• C)increases output above potential GDP.
• D)leads to an increase in the money wage rate.
• E)leads to a decrease in the money wage rate.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds, reported on the income statement as part of operating expenses if related to core operations, or as non-operating expenses if it is not.

Bonds Outstanding Method

A technique used to calculate the total amount of bonds that are currently issued and not yet redeemed or paid off by the issuer.

Note Receivable

A written promise for amounts to be received by a business, typically including interest, from another party.

Impaired Value

The condition in which the market value of an asset is less than its carrying value on the balance sheet.