Economics For Today
Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Chapter 20, Problem 12SQ
To determine

The indication of the stagflation.

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Q. 4   Inflation rate is showing the rising price level of the economy. There are two causes of inflation, demand pull inflation and cost push inflation. Suppose the Government expenditure (G) rises continuously. As a result, price level of the economy rises too. Does it create demand pull inflation or cost push inflation? Explain and show with the help of the diagram?
11. Which of the following best represents a combination of inflation, slow economic growth and high unemployment in an economy? a.Deflation b.Stagflation c.Disinflation d.Disguised inflation
Suppose that people expect inflation to equal 3 percent, but in fact, prices rise by5 percent. Describe how this unexpectedly high inflation rate would help or hurtthe following: (4)1.the government2. a homeowner with a fixed-rate mortgage3.a union worker in the second year of a labor contract4. a college that has invested some of its endowment in government bonds
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