"Demand Inflation" Refers to

question 3

Multiple Choice

"Demand inflation" refers to

• A)the inflation that results from a decrease in net exports.
• B)any inflation that is originally caused by a rightward shift of the AD curve but is maintained at a constant level by monetary validation.
• C)any inflation that is originally caused by a rightward shift of the AD curve but is accelerating due to monetary validation.
• D)only the inflation that results from an expansionary monetary policy.
• E)the inflation that results from any inflationary gap caused by a rightward shift of the AD curve.

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Definitions:

Normal Profits

An economic condition where a firm's total revenue is equal to its total costs, allowing it to cover all its opportunity costs.

Shutdown Point

The point in business operations where the revenue from the sale of goods or services is equal to the variable costs, beyond which the business would incur losses.

Break-Even Point

An output at which a firm makes a normal profit (total revenue = total cost) but not an economic profit.

Variable Costs

Costs that vary directly with the level of production.