Rising Inflation Causes Quantity Demanded to Decline,because ________

question 51

Multiple Choice

Rising inflation causes quantity demanded to decline,because ________.

• A)the central bank raises the nominal interest rate by more than the increase in expected inflation
• B)households and businesses are reluctant to spend when prices rise
• C)higher inflation causes the IS curve to shift to the left
• D)all of the above
• E)none of the above

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Definitions:

Useful Life

The estimated period over which an asset is expected to be usable by the owner, affecting its depreciation calculation.

Book Value

The value of an asset according to its balance sheet account balance, taking into account the cost of the asset minus any depreciation, amortization, or impairment costs.

Fixed Factory Overhead

Indirect manufacturing costs that remain relatively constant regardless of the level of production, such as rent, utilities, and salaries of managers.

Incremental Analysis

A decision-making process used to determine the financial impact of different choices by comparing their costs and benefits.