Which of the Following Can Cause Cost-Push Inflation If the Economy

question 81

Multiple Choice

Which of the following can cause cost-push inflation if the economy is currently in equilibrium at full-employment GDP?

• A) A flood that destroys much of the country's crops.
• B) An increase in the size of the labour force.
• C) A decrease in personal income tax rates, which increases after-tax income.
• D) An increase in the capital stock in the country.

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Definitions:

British Authority

The governing power or control exercised by British governmental and colonial administrations, historically observed in territories under British rule.

Sugar Act

A British law enacted in 1764 aiming to raise revenue from the American colonies by imposing a tax on sugar and other imports, contributing to colonial dissatisfaction and the American Revolution.

Legislation

Laws or legal enactments made or enacted by a governing body or legislature.