Question

Elure A Figure Q, Q, Quantity Q, Quantity Refer to the figures. Which of the following events would most likely result in inflation? Multiple Choice O C) a shift from D2 to Din Figure A O U a shift from D2 to D3 in Figure B O a shift from D2 to Din Figure B Prev 1 of 50 Next > * að n 00

Answer 1

1. A shift from D2 to D3 in figure A will most likely result in inflation. Hence,option(D) is correct.

2. In situations of sticky prices and negative demand shocks , we would expect firms to build up inventories before reducing production. Hence,option(B) is correct.

3. Switzerland had the highest GDP per person in 2014. Hence,option(A) is correct.

4. A decrease in real GDP is most likely indicate higher unemployment. Hence,option(A) is correct.

5. Under conditions of inflexible prices, firms respond to shorter term demand shocks by adjusting inventories , more persistent changes in demand result in changes in production levels. Hence,option(C) is correct.