Inflation, Deflation, Disinflation

Which policy mix is most likely to be effective in the short run for reducing inflation in a closed economy? D

• decreasing the budget surplus (fiscal), increasing the interest rate (monetary)

• decreasing the budget surplus (fiscal), increasing the money supply (monetary)

• increasing the budget surplus (fiscal), increasing the interest rate (monetary)

• increasing the budget surplus (fiscal), increasing the money supply (monetary)

Tags

Inflation, Deflation, Disinflation

• A

• B

• C

• D

Tags

Aggregate Demand & Aggregate Supply

A government is faced with rising inflation. It wishes to reduce inflationary pressure while avoiding a fall in output.

Which action is most likely to meet its needs?

• an increase in laws to promote competition

• an increase in taxation

• an increase in the budget surplus

• an increase in the exchange rate

Tags

Inflation, Deflation, Disinflation

The diagram shows aggregate demand and aggregate supply curves for an economy.

What would cause a change in the aggregate demand from AD to AD1?

• decrease in the budget surplus

• consumption of domestic instead of foreign goods

• government campaigns to encourage household savings

• investment in knowledge-based enterprises

Tags

Aggregate Demand & Aggregate Supply

Which effect of inflation is described as redistributive?

• the improvement in the terms of trade

• the increased reluctance of people to hold money

• the inconvenience of frequently changing prices

• the loss of purchasing power of people on fixed incomes

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Inflation, Deflation, Disinflation

An economy is experiencing a period of deflation.

What must be happening?

• The average price level is falling.

• The output of the economy is falling.

• The rate of inflation is falling.

• The real value of money is falling.

Tags

Inflation, Deflation, Disinflation

How is a rate of inflation that is lower than that expected likely to affect lenders and borrowers in an economy?

• A

• B

• C

• D

Tags

Inflation, Deflation, Disinflation