Inflation occurs when aggregate supply is - (1) more than aggregate demand (2) less than aggregate demand (3) equal to aggregate demand (4) None of these

Inflation occurs when aggregate supply is - (1) more than aggregate demand (2) less than aggregate demand (3) equal to aggregate demand (4) None of these
by

1 Answer

Answer :

(2) less than aggregate demand Explanation: If the supply is less than the demand, the price will increase. Inflation, the persistent increase in the average price level, can be caused by an increase in aggregate demand or a decrease in aggregate supply. This suggests two basics sources, causes, or types of inflation—demand-pull inflation and costpush inflation. In general, prices increase as a result of market shortages, which occur when quantity demanded exceeds quantity supplied. Market shortages can be created by either increases in demand or decreases in supply. Translating this to the macro-economy suggests that inflation occurs when aggregate demand exceeds aggregate supply.
by
selected

Related questions

Inflation occurs when aggregate supply is (1) more than aggregate demand (2) less than aggregate demand (3) equal to aggregate demand (4) None of these

Description : Inflation occurs when aggregate supply is (1) more than aggregate demand (2) less than aggregate demand (3) equal to aggregate demand (4) None of these 

Last Answer :  less than aggregate demand

An increase in aggregate demand is more likely to lead to demand pull inflation (a) If aggregate supply is completely elastic (b) If aggregate supply is completely inelastic © If aggregate supply is unitary elastic (d) If aggregate supply is moderately elastic

Description : An increase in aggregate demand is more likely to lead to demand pull inflation (a) If aggregate supply is completely elastic (b) If aggregate supply is completely inelastic © If aggregate supply is unitary elastic (d) If aggregate supply is moderately elastic

Last Answer : (b) If aggregate supply is completely inelastic

Demand pull inflation may be caused by (a) An increase in cost (b) A decrease in interest rate © A reduction in government spending (d) An outward shift of aggregate supply.

Description : Demand pull inflation may be caused by (a) An increase in cost (b) A decrease in interest rate © A reduction in government spending (d) An outward shift of aggregate supply.

Last Answer : (b) A decrease in interest rate

In general, deficit financing can create inflation, but it can be checked if. A) Government expenditure increases the aggregate supply in the aggregate demand ratio B) All the investment is indicated as payment on national debt only C) Only aggregate demand is increased D) All of the above

Description : In general, deficit financing can create inflation, but it can be checked if. A) Government expenditure increases the aggregate supply in the aggregate demand ratio B) All the investment is indicated as payment on national debt only C) Only aggregate demand is increased D) All of the above

Last Answer : Answer: D

Would a wage increase affect aggregate demand or supply?

Description : Would a wage increase affect aggregate demand or supply?

Last Answer : I don’t know much about economics, but the third option is that the effects might cancel out, meaning no change.

When aggregate supply exceeds aggregate demand - (1) unemployment falls (2) prices rise (3) inventories accumulate (4) unemployment develops

Description : When aggregate supply exceeds aggregate demand - (1) unemployment falls (2) prices rise (3) inventories accumulate (4) unemployment develops

Last Answer : (3) inventories accumulate Explanation: Deflation sets in when aggregate supply exceeds aggregate demand. Recession sets in. This will lead to a buildup in stocks (inventories) and this sends a signal to ... Either way -there is a tendency for output to move closer to the current level of demand.

When aggregate supply exceeds aggregate demand (1) unemployment falls (2) prices rise (3) inventories accumulate (4) unemployment develops

Description : When aggregate supply exceeds aggregate demand (1) unemployment falls (2) prices rise (3) inventories accumulate (4) unemployment develops

Last Answer : inventories accumulate

The process of curing inflation by reducing money supply is called - (1) Cost-push inflation (2) Demand-pull inflation (3) Disinflation (4) Reflation

Description : The process of curing inflation by reducing money supply is called - (1) Cost-push inflation (2) Demand-pull inflation (3) Disinflation (4) Reflation

Last Answer : (3) Disinflation Explanation: Disinflation is a decrease in the rate of inflation -a slowdown in the rate of increase of the general price level of goods and services in a nation's gross ... a very short period of time. Disinflation takes place only when an economy is suffering from recession.

The function of a government by which it seeks to seek a balance of employment, demand-supply, and inflation, is known as: a) Distribution function b) Allocation function c) Stabilization d) Protection

Description : The function of a government by which it seeks to seek a balance of employment, demand-supply, and inflation, is known as: a) Distribution function b) Allocation function c) Stabilization d) Protection

Last Answer : c) Stabilization

The process of curing inflation by reducing money supply is called (1) Cost-push inflation (2) Demand-pull inflation (3) Disinflation (4) Reflation

Description : The process of curing inflation by reducing money supply is called (1) Cost-push inflation (2) Demand-pull inflation (3) Disinflation (4) Reflation

Last Answer : Disinflation

The cost of borrowing is equal to marginal propensity to consume. 21. Investment is (a) An injection that increases aggregate demand (b) An withdrawal that increases aggregate demand © An injection that decreases aggregate demand (d) An withdrawal that decreases aggregate demand

Description : The cost of borrowing is equal to marginal propensity to consume. 21. Investment is (a) An injection that increases aggregate demand (b) An withdrawal that increases aggregate demand © An injection that decreases aggregate demand (d) An withdrawal that decreases aggregate demand

Last Answer : a) An injection that increases aggregate demand

Equilibrium price is the price when : (1) supply is greater than demand (2) supply is less than demand (3) demand is very high (4) supply is equal to demand

Description : Equilibrium price is the price when : (1) supply is greater than demand (2) supply is less than demand (3) demand is very high (4) supply is equal to demand

Last Answer : (4) supply is equal to demand Explanation: The equilibrium price is the price where the goods and services supplied by the producer equals the goods and services demanded by the customer(s). How the equilibrium price is achieved is through the 'Invisible Hand', or market forces of the economy.

Given the supply quantity which is fixed an increase in aggregate demand will have direct impact on (a) Increase in GDP ; (b) Inflationary pressure ; (c) Greater employment opportunity; (d) More equitable distribution of income and wealth

Description : Given the supply quantity which is fixed an increase in aggregate demand will have direct impact on (a) Increase in GDP ; (b) Inflationary pressure ; (c) Greater employment opportunity; (d) More equitable distribution of income and wealth 

Last Answer : (b) Inflationary pressure ;

What is aggregate supply exceeds aggregate demand what is likely to result?

Description : What is aggregate supply exceeds aggregate demand what is likely to result?

Last Answer : Need answer

Concern about an international crisis has caused consumers to save their money and postpone big purchases. What is the effect on aggregate demand and aggregate supply?

Description : Concern about an international crisis has caused consumers to save their money and postpone big purchases. What is the effect on aggregate demand and aggregate supply?

Last Answer : aggregate demand will decrease, lowering both real GDP and the price level

In a market economy equilibrium price is reached at (a) Point of interaction of aggregate demand and aggregate supply curve; (b) At the top of demand curve ; (c) Midpoint of demand curve ; (d) Midpoint of supply curve

Description : In a market economy equilibrium price is reached at (a) Point of interaction of aggregate demand and aggregate supply curve; (b) At the top of demand curve ; (c) Midpoint of demand curve ; (d) Midpoint of supply curve

Last Answer : (a) Point of interaction of aggregate demand and aggregate supply curve;

Market equilibrium of a commodity is determined by (a) Balancing of demand and supply position ; (b) Aggregate demand ; (c) Aggregate supply; (d) Government intervention

Description : Market equilibrium of a commodity is determined by (a) Balancing of demand and supply position ; (b) Aggregate demand ; (c) Aggregate supply; (d) Government intervention

Last Answer : (a) Balancing of demand and supply position ;

Acording to Keynesian theory of income determination, at full employment, a fall in aggregate demand causes - (1) a fall in prices of output and resources (2) a fall in real gross National product and employment (3) a rise in real gross National product and investment (4) a rise in prices of output and resources

Description : Acording to Keynesian theory of income determination, at full employment, a fall in aggregate demand causes - (1) a fall in prices of output and resources (2) a fall in real gross National product ... a rise in real gross National product and investment (4) a rise in prices of output and resources

Last Answer : (1) a fall in prices of output and resources Explanation: In 1936, John Maynard Keynes published the book "The General Theory of Employment, Interest and Money to explain the prolonged and ... at a below-full-employment equilibrium. Suppose that the economy is at the full-employment equilibrium.

Demand in Economics means : (1) Aggregate demand (2) Market demand (3) Individual demand (4) Demand backed by purchasing power

Description : Demand in Economics means : (1) Aggregate demand (2) Market demand (3) Individual demand (4) Demand backed by purchasing power

Last Answer : (4) Demand backed by purchasing power Explanation: Demand ' in Economics refers to the quantity of a good or service consumers ate able and willing to buy at a given price in a given market during a specified time period , other things beings equal.

According to the effective demand principle: a) at a certain price, the output shall not be determined by any known factor b) at a certain price, the output will remain unaffected by rise or fall in demand c) at a certain price, equilibrium output will be solely determined by the aggregate demand d) none of the above

Description : According to the effective demand principle: a) at a certain price, the output shall not be determined by any known factor b) at a certain price, the output will remain unaffected by rise or ... certain price, equilibrium output will be solely determined by the aggregate demand d) none of the above

Last Answer : c) at a certain price, equilibrium output will be solely determined by the aggregate demand

Which of the following does not cause a shift in aggregate demand ? (a) Consumption (b) Government expenditure (c) Investment (d) Prices

Description : Which of the following does not cause a shift in aggregate demand ? (a) Consumption (b) Government expenditure (c) Investment (d) Prices

Last Answer : (d) Prices

If an increase in investment leads to a bigger increase in national income (a) Accelerator (b) Aggregate demand © Monetarism (d) Multiplier

Description : If an increase in investment leads to a bigger increase in national income (a) Accelerator (b) Aggregate demand © Monetarism (d) Multiplier

Last Answer : (d) Multiplier

An increase in consumption at any given level of income will lead to (a) Higher aggregate demand. (b) An increase in exports. © A fall in taxation revenue. (d) A decrease in import spending.

Description : An increase in consumption at any given level of income will lead to (a) Higher aggregate demand. (b) An increase in exports. © A fall in taxation revenue. (d) A decrease in import spending.

Last Answer : (a) Higher aggregate demand.

In explaining the level of unemployment, Keynes emphasized,- (a) Changes in technology. (b) Aggregate demand. © Inflationary expectations. (d) Lending by financial institutions.

Description : In explaining the level of unemployment, Keynes emphasized,- (a) Changes in technology. (b) Aggregate demand. © Inflationary expectations. (d) Lending by financial institutions.

Last Answer : (b) Aggregate demand.

According to Keynesian theory of income determination, at full employment, a fall in aggregate demand causes (1) a fall in prices of output and resources (2) a fall in real gross National product and employment (3) a rise in real gross National product and investment (4) a rise in prices of output and resources

Description : According to Keynesian theory of income determination, at full employment, a fall in aggregate demand causes (1) a fall in prices of output and resources (2) a fall in real gross National product and ... rise in real gross National product and investment (4) a rise in prices of output and resources

Last Answer :  a fall in prices of output and resources

Demand in Economics means : (1) Aggregate demand (2) Market demand (3) Individual demand (4) Demand backed by purchasing power

Description : Demand in Economics means : (1) Aggregate demand (2) Market demand (3) Individual demand (4) Demand backed by purchasing power

Last Answer : Demand backed by purchasing power

In the case of agriculture, a. the demand has shifted to the right more than the supply has shifted to the right b. the demand has shifted to the right less than the supply has shifted to the right c. the demand has shifted to the left more than the supply has shifted to the left d. the demand has shifted to the left less than the supply has shifted to the left

Description : In the case of agriculture, a. the demand has shifted to the right more than the supply has shifted to the right b. the demand has shifted to the right less than the supply has shifted to the right ... the left d. the demand has shifted to the left less than the supply has shifted to the left

Last Answer : b. the demand has shifted to the right less than the supply has shifted to the right

Inflation is caused by certain factors 1. Those causing an increase in demand 2. Those a short, fall in supply 3. Structural rigidities in the economy 4. All of these 5. None of these

Description : Inflation is caused by certain factors 1. Those causing an increase in demand 2. Those a short, fall in supply 3. Structural rigidities in the economy 4. All of these 5. None of these

Last Answer : Those causing an increase in demand

Cost push inflation arises due to (a) Persistent rise in factor cost ; (b) Mismatch between demand and supply of commodities (c) Combine phenomena of demand pull and cost-push inflation. ; (d) Increase in price of precious metal

Description : Cost push inflation arises due to (a) Persistent rise in factor cost ; (b) Mismatch between demand and supply of commodities (c) Combine phenomena of demand pull and cost-push inflation. ; (d) Increase in price of precious metal

Last Answer : (a) Persistent rise in factor cost ;

Demand pull inflation rises due to (a) Persistent rise in factor cost ; (b) Mismatch between demand and supply of commodities (c) Combine phenomena of demand pull and cost-push inflation. ; (d) Increase in Price of precious metal

Description : Demand pull inflation rises due to (a) Persistent rise in factor cost ; (b) Mismatch between demand and supply of commodities (c) Combine phenomena of demand pull and cost-push inflation. ; (d) Increase in Price of precious metal

Last Answer : ; (b) Mismatch between demand and supply of commodities

Equilibrium state is achieved at ………………… (a) The peak point of supply curve ; (b) The bottom point of demand curve (c) The inflation point of demand curve ; (d) The intersection of demand and supply curve

Description : Equilibrium state is achieved at ………………… (a) The peak point of supply curve ; (b) The bottom point of demand curve (c) The inflation point of demand curve ; (d) The intersection of demand and supply curve

Last Answer : (d) The intersection of demand and supply curve

What happens when there is a demand deficiency in an economy? (1) Poverty (2) Stagnation (3) Recession (4) Inflation

Description : What happens when there is a demand deficiency in an economy? (1) Poverty (2) Stagnation (3) Recession (4) Inflation

Last Answer : (2) Stagnation Explanation: Deficient demand refers to the situation when aggregate demand for goods and services falls short of aggregate supply of output which is produced by fully employing ... which both capital and labor are redundant relative to the opportunities for employing them profitably.

What happens when there is a demand deficiency in an economy? (1) Poverty (2) Stagnation (3) Recession (4) Inflation

Description : What happens when there is a demand deficiency in an economy? (1) Poverty (2) Stagnation (3) Recession (4) Inflation

Last Answer : Stagnation

Inflation can be checked by - (1) increasing exports (2) increasing money supply (3) increasing Government expenditure (4) decreasing money supply

Description : Inflation can be checked by - (1) increasing exports (2) increasing money supply (3) increasing Government expenditure (4) decreasing money supply

Last Answer : (4) decreasing money supply Explanation: The technical and most often used way to control inflation is by tightening the money supply. The logic goes that when people do not have excess money, ... . Most central banks use high interest rates as the traditional way to fight or prevent inflation.

Which curve shows the inverse relationship between unemployment and inflation rates? (1) Supply curve (2) Indifference curve (3) IS curve (4) Phillips curve

Description : Which curve shows the inverse relationship between unemployment and inflation rates? (1) Supply curve (2) Indifference curve (3) IS curve (4) Phillips curve

Last Answer : (4) Phillips curve Explanation: The Phillips curve shows the inverse relationship between inflation and unemployment: as unemployment decreases, inflation increases. The relationship, however, is not linear. Graphically, ... unemployment rate is on the x-axis and the inflation rate is on the y-axis.

Which of the following can be used for checking inflation temporarily? (1) Increase in wages (2) Decrease in money supply (3) Decrease in taxes (4) None of these

Description : Which of the following can be used for checking inflation temporarily? (1) Increase in wages (2) Decrease in money supply (3) Decrease in taxes (4) None of these

Last Answer : (2) Decrease in money supply Explanation: An open market operation (also known as OMO) is an activity by a central bank to buy or sell government bonds on the open market. India ... those in the other developed countries. Economists claim that an increase in money supply alone constitutes inflation.

In a period of inflation and price rises the supply of money remains - (1) the same (2) increases (3) decreases (4) increases or decreases pro-portionately.

Description : In a period of inflation and price rises the supply of money remains - (1) the same (2) increases (3) decreases (4) increases or decreases pro-portionately.

Last Answer : (2) increases Explanation: Money supply is the total amount of monetary assets available in an economy at a specific time. The relation between money and prices is historically associated with the quantity ... money-supply growth, at least for rapid increases in the amount of money in the economy.

Inflation is caused by - (1) increase in money supply and decrease in production (2) increase in money supply (3) increase in production (4) decrease in production

Description : Inflation is caused by - (1) increase in money supply and decrease in production (2) increase in money supply (3) increase in production (4) decrease in production

Last Answer : (1) increase in money supply and decrease in production Explanation: Economists generally agree that in the long run, inflation is caused by increases in the money supply. According to the theory of ... few goods. The increase in money supply is not matched by the equivalent production of goods.

The supply-side measure to control inflation is - (1) Reducing public expenditure (2) Price control through Public Distribution System (3) Higher taxation to mop up liquidity (4) Credit control

Description : The supply-side measure to control inflation is - (1) Reducing public expenditure (2) Price control through Public Distribution System (3) Higher taxation to mop up liquidity (4) Credit control

Last Answer : (2) Price control through Public Distribution System Explanation: The issue of inflation is addressed from both demand and supply sides. demand management is achieved by measures such as postponing public expenditure ... rice and wheat resorted to by FCI from its buffer stock in times of price rise.

Inflation is caused by (1) increase in money supply and decrease in production (2) increase in money supply (3) increase in production (4) decrease in production

Description : Inflation is caused by (1) increase in money supply and decrease in production (2) increase in money supply (3) increase in production (4) decrease in production

Last Answer :  increase in money supply and decrease in production

Inflation can be checked by (1) increasing exports (2) increasing money supply (3) increasing Government expenditure (4) decreasing money supply

Description : Inflation can be checked by (1) increasing exports (2) increasing money supply (3) increasing Government expenditure (4) decreasing money supply

Last Answer : decreasing money supply

In a period of inflation and price rise the supply of money remains (1) the same (2) increases (3) decreases (4) increases or decreases proportionately.

Description : In a period of inflation and price rise the supply of money remains (1) the same (2) increases (3) decreases (4) increases or decreases proportionately.

Last Answer : increases

Which of the following can be used for checking inflation temporarily ? (1) Increase in wages (2) Decrease in money supply (3) Decrease in taxes (4) None of these

Description : Which of the following can be used for checking inflation temporarily ? (1) Increase in wages (2) Decrease in money supply (3) Decrease in taxes (4) None of these

Last Answer : Decrease in money supply

Which curve shows the inverse relationship between unemployment and inflation rates ? (1) Supply curve (2) Indifference curve (3) IS curve (4) Phillips curve

Description : Which curve shows the inverse relationship between unemployment and inflation rates ? (1) Supply curve (2) Indifference curve (3) IS curve (4) Phillips curve

Last Answer :  Phillips curve 

The supply-side measure to control inflation is (1) Reducing public expenditure (2) Price control through Public Distribution System (3) Higher taxation to mop up liquidity (4) Credit control

Description : The supply-side measure to control inflation is (1) Reducing public expenditure (2) Price control through Public Distribution System (3) Higher taxation to mop up liquidity (4) Credit control

Last Answer : Price control through Public Distribution System

Say's Law of Market holds that - (1) supply is not equal to demand (2) supply creates its own demand (3) demand creates its own supply (4) supply is greater than demand

Description : Say's Law of Market holds that - (1) supply is not equal to demand (2) supply creates its own demand (3) demand creates its own supply (4) supply is greater than demand

Last Answer : (2) supply creates its own demand Explanation: Say's law, or the law of market, is an economic principle of classical economics named after the French businessman and economist Jean-Baptiste Say ... General Theory of Employment, Interest and Money (1936) and a central tenet of Keynesian economics.

Say’s Law of Market holds that (1) supply is not equal to demand (2) supply creates its own demand (3) demand creates its own supply (4) supply is greater than demand

Description : Say’s Law of Market holds that (1) supply is not equal to demand (2) supply creates its own demand (3) demand creates its own supply (4) supply is greater than demand 

Last Answer : supply creates its own demand

The balance of payments of a country is in equilibrium when the - (1) demand as well as supply of the domestic currency are the highest (2) demand for the domestic currency is equal to its supply (3) demand for the domestic currency is the highest (4) demand for the domestic currency is the lowest

Description : The balance of payments of a country is in equilibrium when the - (1) demand as well as supply of the domestic currency are the highest (2) demand for the domestic currency is equal to its supply (3) demand for the domestic currency is the highest (4) demand for the domestic currency is the lowest

Last Answer : (2) demand for the domestic currency is equal to its supply Explanation: When the balance of payments (BOP) of a country is in equilibrium, the surplus or deficit is eliminated from the ... currency is equal to its supply. The demand and supply situation is thus neither favourable nor unfavourable.

The balance of payments of a country is in equilibrium when the (1) demand as well as supply of the domestic currency are the highest (2) demand for the domestic currency is equal to its supply (3) demand for the domestic currency is the highest (4) demand for the domestic currency is the lowest

Description : The balance of payments of a country is in equilibrium when the (1) demand as well as supply of the domestic currency are the highest (2) demand for the domestic currency is equal to its supply (3) demand for the domestic currency is the highest (4) demand for the domestic currency is the lowest

Last Answer : demand for the domestic currency is equal to its supply

Regarding money supply situation in India it can be said that the : (1) Currency with the public is inconvertible only. (2) Currency with the public is less than the deposits with the banks. (3) Currency with the public is more than the deposits with the banks. (4) Currency with the public is almost equal to the deposits with banks.

Description : Regarding money supply situation in India it can be said that the : (1) Currency with the public is inconvertible only. (2) Currency with the public is less than the deposits with the banks. (3) ... the deposits with the banks. (4) Currency with the public is almost equal to the deposits with banks.

Last Answer : (2) Currency with the public is less than the deposits with the banks. Explanation: Money supply in India includes the following: (i) Currency with the public: (ii) Demand deposits and time ... to total supply of money has been increasing with reciprocal diminution in currency held by the public.