Suppose Inflation Comes in the Form of an Across-The Board

question 24

Multiple Choice

Suppose inflation comes in the form of an across-the board increase in all prices by some percentage k.For a consumer with exogenous income operating in a 2-good world, this will cause the budget constraint to

• A)rotate inward
• B)rotate outward
• C)shift out in a parallel way
• D)shift inward in a parallel way
• E)none of the above

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Definitions:

American Exceptionalism

The idea that the United States has a unique character and role in the world, often associated with the country's history, political values, and institutions.

Military Prowess

The demonstrated skill, capability, and effectiveness of a country's military in defense and warfare situations.

Economic Recovery

A period of increasing business activity signaling the end of a recession or economic downturn, typically characterized by a rise in GDP, employment, and consumer spending.

Great Depression

A global economic downturn of severe magnitude, primarily occurring in the 1930s, starting in the United States.