MEDIUM. Rating. a decrease in the tax rate on consumer income B It was possible to control without causing … Cost-push inflation occurs when firms respond to rising costs by increasing prices in order to protect their profit margins.. C. High level of public expenditure. Demand-Pull Inflation . Performance & security by Cloudflare, Please complete the security check to access. The 1970s saw some of the highest rates of inflation … Ans.) Which of the following is the index used to measure changes in gross domestic product? Follow Twitter. With the increase in public expenditure new projects will be implemented increasing the employment opportunities. an increase in the prices of raw materials and other components.This might be because of a rise in commodity prices such as oil, copper and agricultural products used in food processing. Periods of rapid inflation occur when the prices of goods and services in an economy suddenly rise, eroding the purchasing power of savings. Excessive government spending b. 3. d. increase in supply of money. The following is considered a cause of inflation: Producers raise prices to meet higher … The following is considered a cause of inflation: Producers raise prices to meet higher costs. Expert Answer . She writes about the U.S. Economy for The Balance. a. increase in demand for goods and services b. increase in cost of raw materials c. increase in demand for money. MEDIUM. Which of the following factors would not cause demand-pull inflation? C. Quantity Theory. A. Five Causes of Demand-Pull Inflation . Question. They may not have time to build the manufacturing needed to boost supply. Confirmed by Janet17 [10/22/2014 4:44:47 PM] Get an answer. If you are on a personal connection, like at home, you can run an anti-virus scan on your device to make sure it is not infected with malware. Inflation is state in which the value of money is falling, i.e. Causes More Inflation . This in turn increases the purchasing power of the people which constitutes the excess demand situation. Which of the following would likely NOT cause inflation? When … Bases on demand side or cost side factors, generally there are two causes of inflation: Demand-Pull Inflation: There is mismatch in demand and supply. Which of the following is not a cause of inflation? Which of the following is not a cost created by high inflation? You may need to download version 2.0 now from the Chrome Web Store. A deficit budget may be financed by the additional money creation. Cost-push inflation. • This is inflation driven by consumers. Rising wages – higher wages increase firms costs and increase consumers’ disposable income to spend more. They know their homes and other investments will increase in value. When families feel confident, they spend more instead of saving. When inflation is too high of course, it is not good for the economy or individuals. Show transcribed image text. 1 Rapid Growth of costly imports 2 Slow Growth of Individual output 3 Slow Growth in Population 4 Slow Growth of agr According to the Keynesian framework, _____ may cause a recession, but not inflation. Asked 8/8/2014 9:56:49 AM. Hyperinflation commonly occurs when there is a significant rise in money supplyQuantity Theory of MoneyThe Quantity Theory of Money refers to the idea that the quantity of money available (money supply) grows at the same rate as price levels do in the long run. Asked 10/18/2014 5:07:52 PM. It occurs when consumer demand for goods and services increases so much that it outstrips supply. (Select all that apply.) When interest rates fall or taxes decrease and the access to money becomes less restricted, consumers become less sensitive to price changesthat is not supported by economic growth. Kimberly Amadeo has 20 years of experience in economic analysis and business strategy. See the answer . The following factors can be stated for the causes for inflation: 1. a major trading partner’s economic slowdown. This is demand-pull inflation causing cost increases. The mounting public expenditure is a basic reason for the excess demand in an economy. Simply put, it is caused by dramatically increasing th… d. demand is less than supply. 2. In economics, we refer to these as the demand-pull effect and the cost-push effect. The same amount of such a product will cost more and more money as long as this situation continues. For example: There are five causes of demand-pull inflation. Which of the following is not a cause of inflation? A. Despite this is not the only cause of inflation a demand that continually grows and exceeds the supply inflates the price of that/those product(s) what certainly leads to an imbalance between the money and the goods. Which of the following is NOT a form of unemployment? Five Causes of Demand-Pull Inflation . A. Demand-pull inflation happens when an economy experiences an increased demand for consumer goods. Decrease in population growth. A decrease in consumers' saving rate c. An international oil embargo from oil-producing countries d. An economy operating at or near its capacity. D. Slow increase in industrial and agricultural production. Which of the following is not a cause of inflation? When there's a surge in demand for goods across an economy, prices increase, and the result is … a. increase in demand for goods and services b. increase in cost of raw materials c. increase in demand for money. Implicit GDP price deflator. Follow Linkedin. Causes of Inflation. According to the Keynesian framework, _____ may cause a recession, but not inflation. Critics of wage-push inflation theory put forward the arguments against wage rise as a sufficient and independent cause of inflation. However, if the Fed follows a Taylor rule A rule for monetary policy in which the target real interest rate increases when inflation is too high and decreases when output is too low., it will react to the fact that output is below its target by reducing real interest rates with the aim of increasing spending and output. Updated 8/8/2014 10:13:33 AM. Option C When the … Decrease in population growth. A decrease n population growth would mean there will be reduced demand in the future and hence inflation will be lower. Inflation tends to cause things to be less predictable and this makes planning more difficult: Yes, that's correct. Are We Wrong To Think We're Right? Increase in supply of currency. B. This answer has been confirmed as correct and helpful. When families feel confident, they spend more instead of saving. There could be many reasons behind recurring inflation in the economy. Additional spending by households. c. there is not enough money in the economy. When the aggregate demand … O a) Poor weather patterns lead to a supply shock in the farming industry. 1. D. Slow increase in industrial and agricultural production. Updated September 17, 2020 Inflation reduces the purchasing power of each unit of currency, which leads to increases in the prices of goods and services over time. Another way to prevent getting this page in the future is to use Privacy Pass. b) Government prints money to finance its budget shortfall. toppr. Cloudflare Ray ID: 5fc058defc74cc0c s. Log in for more information. 1. a. wages go down. The first is a growing economy. They expect to get raises and better jobs. (i) In a number of cases, wage increases are not autonomous, but are induced by the operation of demand-pull factors. B. Answer. Demand-pull inflation can be caused by strong consumer demand for a product or service. Well done. They feel that the government is doing the right thing in guiding the economy. Which of the … Which of the following is not a cause of inflation A hyper inflation B cost from ECONOMICS EC102 at University of the South Pacific, Fiji Devaluation – increasing cost of imported goods, also boost to domestic demand 4. Which of the following is not a microeconomics topic? B. Demand-Pull Theory. New answers. b. producers raise prices to meet higher costs. Increase in supply of currency. B. Which of the following is not a cause of inflation a An increase in the average from ACCOUNTING 101 at Angeles University Foundation A. Cost-Push Theory. Answer. Inflation exists when money supply exceeds available goods and services. 5. Inflation is often defined in terms of its supposed causes. Or inflation is attributed to budget deficit financing. Question. Which of the following is not a cause of inflation? They know their homes and other investments will increase in value. And the higher inflation gets, the less chance there is that savers will see any real return on their money. In that article, I promised that I would have much more to say about some of the topics. s. Expert answered|alfred123|Points 29361| Log in for more information. Expectations of inflation – causes workers to demand wage increases and firms to push up prices. Last Checked At 2:32pm = This problem has been solved! But the situation of monetary expansion or budget deficit may not cause price level to rise. Inflation: A situation of a steady and sustained rise in general prices is usually known as inflation. Which of the following statements bes... Our tool is still learning and trying its best to find the correct answer to your question. Many of us have views on what to do Unfortunately, the urge to spend and invest in the face of inflation tends to boost inflation in turn, creating a potentially catastrophic feedback loop. Inflation exists when money supply exceeds available goods and services. Inflation is often defined in terms of its supposed causes. O c) The housing market recovers and home sales rise. The following is considered a cause of inflation: Producers raise prices to meet higher costs. c. Demand-pull inflation is about spending. The following factors can be stated for the causes for inflation: 1. Inflation and reflect a dozen diverse views on one of the nation's central economic problems. Select one: a. Inflationary impacts are not distributed evenly across the population, therefore, inflation causes the economy to redistribute income across households. Demand-pull inflation is a tenet of Keynesian economics that describes the effects of an imbalance in aggregate supply and demand. a major trading partner’s economic slowdown. Search for an answer or ask Weegy. The first is a growing economy. A. There are many reasons why costs might rise: Component costs: e.g. Inflation is best defined as being: (a) a phenomenon caused exclusively be excessive money supply growth; (b) the increase in living standards associated with rising wages universally; (c) the economic outcome that results from inappropriate fiscal policy; (d) a … Answered By . B. The mounting public expenditure is a basic reason for the excess demand in an economy.