Question : 41) Which of the following factors could start a demand-pull : 1238122

41) Which of the following factors could start a demand-pull inflation?

A) an increase in tax rates

B) a decrease in government expenditure

C) a decrease in the money wage rate

D) an increase in the money wage rate

E) an increase in the quantity of money

42) Increases in the quantity of money can start a ________ inflation and an increase in government expenditure can start a ________ inflation.

A) demand-pull; demand-pull

B) demand-pull; cost-push

C) cost-push; cost-push

D) cost-push; demand-pull

E) None of the above is correct because increases in the quantity of money are necessary to continue an inflation but cannot start an inflation.

43) Initially, demand-pull inflation will

A) increase the price level and not change real GDP.

B) increase both the price level and increase real GDP.

C) increase the price level and decrease real GDP.

D) shift the aggregate supply curve rightward.

E) decrease potential GDP.

44) A demand-pull inflation initially is characterized by

A) increasing real output and a labor shortage.

B) increasing real output and a labor surplus.

C) decreasing real output and a labor shortage.

D) decreasing real output and a labor surplus.

E) no change in real output and a labor shortage.

45) If demand pull inflation occurs when the economy is already at potential GDP, then following the initial increase in aggregate demand, the

A) AS curve shifts rightward.

B) potential GDP line shifts rightward.

C) AS curve shifts leftward.

D) potential GDP line shifts leftward.

E) None of the above is correct because demand-pull inflation shifts only the aggregate demand curve.

46) Compared to the initial equilibrium, an initial increase in aggregate demand that is NOT followed by an increase in the quantity of money results in new long-run equilibrium with

A) a higher price level but the same real GDP.

B) a higher price level and an increased level of real GDP.

C) the same price level and a lower level of real GDP.

D) the same price level and the same real GDP.

E) None of the above answers is correct.

47) A demand-pull inflation consists of ________ shifts in the AD curve and ________ shifts in the AS curve.

A) rightward; rightward

B) rightward; leftward

C) right; no

D) leftward; rightward

E) leftward; leftward

48) In a persisting demand-pull inflation

A) aggregate supply decreases and aggregate demand increases.

B) aggregate demand decreases and aggregate supply decreases.

C) aggregate demand increases and potential GDP decreases.

D) aggregate supply increases and aggregate demand increases.

E) None of the above answers is correct.

49) Demand-pull inflation results from continually increasing the quantity of money, which leads to continually

A) decreasing potential GDP.

B) increasing potential GDP.

C) increasing aggregate supply.

D) decreasing aggregate demand.

E) increasing aggregate demand.

50) Demand-pull inflation persists because of

A) continuing increases in government expenditures.

B) continuing increases in the quantity of money.

C) continuing increases in the real wage rate.

D) continuing decreases in the money wage rate.

E) continuing increases in aggregate supply.