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D) both the inflation rate and the unemployment rate fall. Once people expect inflation, they will buy things now to avoid higher future prices. This increases demand and is one of the most common and healthy causes of demand pull inflation. A. a high rate of productivity growth. Answer: B- a positive output gap. In the case of demand-pull inflation, other things being equal: A) both the inflation rate and the unemployment rate rise at the same time. reduces the money supply. D. an increase in the rate of interest. In the case of cost-push inflation, other things being equal: A) both the inflation rate and the unemployment rate rise at the same time. C an increase in the value of its exchange rate. B. a positive output gap. D an increase in the rate of interest. 8. All other things being equal, an economy is most likely to experience demand-pull inflationary pressure when it has. B) the unemployment rate rises but the inflation rate falls. In the case of cost-push inflation, other things being equal: A) both the inflation rate and the unemployment rate rise at the same time. Q.21. C) the inflation rate rises but the unemployment rate falls. B) the unemployment rate rises but the inflation rate falls. That increases demand, which then creates demand-pull inflation. D) both the inflation rate and the unemployment rate fall. B a positive output gap. ... which can outpace rising prices of other goods. 5. is desirable during a period of demand-pull inflation. Assume that the sacrifice ratio for an economy is 4. D) both the inflation … C. an increase in the value of its exchange rate. Stocks. 251. Demand-pull inflation demonstrates the causes of price increases. The sacrifice ratio measures the: Page 56 For example, businesses expected higher interest rates and inflation in the 1970s. B) the unemployment rate rises but the inflation rate falls. For … Other things being equal, an expansion of commercial bank lending (Points : 4) changes the composition, but not the size, of the money supply. Worst Cases of Hyperinflation in History ... generating a different kind of inflation called demand-pull inflation. Q.20. Stocks have a reasonable chance of keeping pace with inflation—but when it comes to doing so, not all equities are created equal. That created galloping inflation. Cost-push inflation shows how inflation, once it begins, is difficult to stop. B) the unemployment rate rises but the inflation rate falls. C) the inflation rate rises but the unemployment rate falls. Demand-pull inflation is … increases the money supply. In the case of cost-push inflation, other things being equal: A) both the inflation rate and the unemployment rate rise at the same time. There are many methods used to control inflation; some work well, while others may have damaging effects. Cost-push inflation is the decrease in the aggregate supply of goods and services stemming from an increase in the cost of production. Once the expectation of inflation sets in, it's hard to eradicate. D) both the inflation … C) the inflation rate rises but the unemployment rate falls. Expectation of inflation in the near future This economic situation corresponds to the scenario when people expect inflation in the near future and hence buy things now to avoid buying at higher prices later. C) the inflation rate rises but the unemployment rate falls. 20 All other things being equal, an economy is most likely to experience demand-pull inflationary pressure when it has A a high rate of productivity growth. When a currency is worth less, its exchange rate weakens when compared to other currencies. 252. 6. Demand and is one of the most common and healthy causes of demand pull inflation pressure when comes. A currency is worth less, its exchange rate to eradicate of inflation demand-pull. 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