In the Short Run, Demand-Pull Inflation Will Drive Up the Price

question 153

True/False

In the short run, demand-pull inflation will drive up the price level and increase real output, but in the long run, only the price level will rise.

---

Definitions:

MPC

Stands for Marginal Propensity to Consume, which measures the portion of additional income that an individual spends on consumption.

Multiplier Value

A factor that quantifies the impact of a change in some economic activity on the rest of the economy.

MPC (Marginal Propensity to Consume)

A measure of the change in consumption resulting from a change in income; specifically, the proportion of additional income that is spent on consumption.

Multiplier

A factor by which an initial change in spending will alter total economic output by a greater amount.