If Demand Pull Inflation Occurs When the Economy Is Already

question 191

Multiple Choice

If demand pull inflation occurs when the economy is already at potential GDP, then following the initial increase in aggregate demand, the

• A) SAS curve shifts rightward.
• B) LAS curve shifts rightward.
• C) SAS curve shifts leftward.
• D) LAS curve shifts leftward.

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Definitions:

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business, such as rent, salaries, and insurance premiums.

Inventory Management

Inventory management involves overseeing and controlling the ordering, storing, and use of components that a company will use in the production of the items it will sell as well as the managing of quantities of finished products.

Collection Policy

Procedures followed by a firm in collecting accounts receivable.

Accounts Receivable

Money owed to a company by its customers for products or services that have been delivered but not yet paid for.