When the Price of a Key Input Increases Suddenly, It

question 134

Multiple Choice

When the price of a key input increases suddenly, it causes:

• A) cost-push inflation.
• B) the business cycle to become sporadic.
• C) demand-pull inflation.
• D) the velocity of money to rise.

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales over a short period, such as rent or salaries.

Operating Cash Flow

The cash generated from the normal operating activities of a business within a specific time period.

Net Present Value

Net present value is the difference between the present value of cash inflows and the present value of cash outflows over a period of time, used in capital budgeting to assess the profitability of an investment.

Fixed Costs

Overheads that do not vary with production or sales volumes, encompassing rental fees, salary payments, and premiums for insurance.