Rising Inflation Causes Quantity Demanded to Decline,because ________

question 51

Multiple Choice

Rising inflation causes quantity demanded to decline,because ________.

• A)the central bank raises the nominal interest rate by more than the increase in expected inflation
• B)households and businesses are reluctant to spend when prices rise
• C)higher inflation causes the IS curve to shift to the left
• D)all of the above
• E)none of the above

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Definitions:

Incrementalism

A policy or strategy of making gradual changes or taking small steps instead of large, drastic actions.

Emergent Strategies

Emergent strategies develop over time as managers learn from and respond to experience.

Managerial Learning Curve

The process by which managers gain experiential knowledge that improves their decision-making, efficiency, and effectiveness over time.

Unrelated Diversification

A business strategy where a company expands into industries or markets that are not related to its existing business activities.