Demand Pull Inflation Occurs When The

question 125

Multiple Choice

Demand pull inflation occurs when the:

• A) price of a key input increases suddenly.
• B) price level changes in response to changes in the business cycle.
• C) price of necessity goods increases suddenly.
• D) business cycle becomes sporadic and unpredictable.

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Definitions:

U-Shape

A graphical representation describing a relationship or phenomenon that decreases, reaches a minimum point, and then increases, resembling the letter "U."

Economies of Scale

Reduction in per unit cost as the volume of production increases, due to factors like bulk purchasing and efficient use of resources.

Technological Change

The overall process of invention, innovation, and diffusion of technology or processes.

Returns to Scale

The rate at which output increases in response to proportional increases in all inputs or resources, reflecting the production efficiency of a firm.