Cost-Push Inflation

question 253

Multiple Choice

Cost-push inflation

• A)is caused by excessive total spending.
• B)shifts the nation's production possibilities curve leftward.
• C)moves the economy inward from its production possibilities curve.
• D)is a mixed blessing because it has positive effects on real output and employment.

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Definitions:

Social Optimum

The ideal state of resource allocation in which society's overall welfare is maximized, balancing efficiency and equity among individuals.

Market Equilibrium

The point in a market where the quantity demanded by consumers equals the quantity supplied by producers, resulting in a stable price.

Negative Externality

An adverse effect on a third party not directly involved in a transaction, which results from economic activity without compensation.

Negative Externality

A cost suffered by a third party due to an economic transaction, without compensation.