All Else Equal, a Decrease in the Rate of Inflation

question 88

Multiple Choice

All else equal, a decrease in the rate of inflation ____ aggregate spending and ____ short-run equilibrium output.

• A) increases; increases
• B) decreases; increases
• C) increases; decreases
• D) decreases; decreases

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Definitions:

Punitive Damages

Financial compensation awarded to a plaintiff that goes beyond what is necessary to compensate for losses and is intended to punish the defendant.

Gross Negligence

A severe lack of care that shows a reckless disregard for the safety or lives of others, which is considered more serious than simple negligence.

Strict Liability

A legal doctrine holding parties responsible for damages or harm caused by their actions, regardless of intent or negligence.

Res Ipsa Loquitur

A legal doctrine that infers negligence from the very nature of an accident or injury, in the absence of direct evidence on how the defendant behaved.