Large or Persistent Inflation Is Almost Always Caused by

question 79

Multiple Choice

Large or persistent inflation is almost always caused by

• A) excessive government spending.
• B) excessive growth in the quantity of money.
• C) foreign competition.
• D) higher-than-normal levels of productivity.

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Definitions:

Long Run

An economic term referring to a period during which all factors of production and costs are variable, allowing for full adjustment to changes.

Fixed Cost

Costs that do not change with the level of output or sales, such as rent or salaries.

Variable Cost

Expenses that change in proportion to the amount of goods or services produced, like labor and materials.

Diseconomies of Scale

occur when a company or production process becomes less efficient as it scales up, leading to increased average costs per unit.