If the Economy Is Producing at Capacity and Consumers Are

question 129

Multiple Choice

If the economy is producing at capacity and consumers are willing and able to buy more,this may cause

• A)Demand-pull inflation.
• B)Cost-push inflation.
• C)Supply-side inflation.
• D)The price effect.

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Definitions:

Moral Hazard

The situation in which one party takes additional risks because they know they will not bear the full consequences of their actions.

Adverse Selection

A situation where sellers have more information than buyers, leading to high-quality goods and services being squeezed out of the market because they cannot be adequately priced.

Private Information

Information that some people have, but others do not.

Economic Decisions

Choices made by individuals, businesses, or governments involving the allocation of resources to satisfy their needs and desires.