Question

. The term stagflation refers to an economy: a.with hyperinflation, but low unemployment b.with low inflation,...

. The term stagflation refers to an economy:
a.with hyperinflation, but low unemployment
b.with low inflation, but expanding capital stock.
c. that is experiencing stagnated technology growth, but no inflation .
d. that is not growing, but has inflation.

Stagflation is the result of:
a. a decrease in long-run aggregate supply.
b. an increase in short-run aggegate supply.
c. an increase in long-run aggregate supply.
d. a decrease in short-run aggregate supply.

Which of the following events could cause stagflation?
a.The Federal Reserve increases interest rates.
b. Government spending on infrastructure increases.
c.Steel and other raw materials increase in price.
d. Wages fall due to increased foreign competition.

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Answer #1

Answer 1 = correct option is D

Reason = stagflation refers to economy with that is not growing or has slow economic growth but is accompanied by inflation

Answer 2= correct option is D

Stagflation is the result of decrease in short run Aggregate supply since during stagflation short run Aggregate supply curve shift leftwards.

Answer 3 = correct option is C

Reason = stagflation is caused by cost push inflation which caused rise in cost of production. When steel and other raw material Increase in price cost of production will increase resulting in stagflation.

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