Inflation

Inflation

• lowers interest rates.

• reduces the export power of the dollar.

• reduces the purchasing power of the dollar.

• increases the purchasing power of the dollar.

Demand-pull inflation occurs when

• prices rise because of an increase in aggregate spending not fully matched by an increase in aggregate output.

• there is a negative GDP gap.

• there is a negative price gap.there are increases in per-unit costs of production.

• there is a negative price gap.there are increases in per-unit costs of production.

The losers from inflation are those with

• significant debt.

• fixed incomes in nominal terms.

• no savings.

• incomes rising as fast as the rate of inflation.

Cost-push inflation occurs in the presence of __________.

 

• excess demand for goods and services

• a trade deficit

• excess inventory

• rising per-unit production costs

What are the correct measure to reduce inflation

• Reduce tax rate

• increase government spending

• increase interest rate

• reduce discount rate