Suppose That the Money Prices of Raw Materials Increase So

question 275

Multiple Choice

Suppose that the money prices of raw materials increase so that short-run aggregate supply decreases. If the Federal Reserve does not respond, the higher money price of raw materials will i. repeatedly shift the aggregate demand curve rightward and raise the price level.
Ii. shift the aggregate demand curve rightward and the aggregate supply curve leftward, raising prices.
Iii. result initially in lower employment and a higher price level.

• A)i only
• B)both i and ii
• C)both ii and iii
• D)i and iii
• E)iii only

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Definitions:

Minority Active Investment

An investment where the investor holds a non-controlling interest in a company but is still actively involved in its management or operations.

Equity Method

An accounting technique used for recording investments in associate companies where the investment is initially recognized and subsequently adjusted for the investor’s share of the net assets of the investee, including recognized income or loss.

Cost Method

An accounting method used to record investments in which the investment is recorded at its acquisition cost without recognizing subsequent changes in market value.

Investment Method

A technique for recognizing the investor's share of investee profits and adjusting the carrying amount of the investment accordingly.