D) both the inflation … That created galloping inflation. When a currency is worth less, its exchange rate weakens when compared to other currencies. increases the money supply. B) the unemployment rate rises but the inflation rate falls. In the case of cost-push inflation, other things being equal: A) both the inflation rate and the unemployment rate rise at the same time. Stocks. D. an increase in the rate of interest. Q.20. D) both the inflation … C an increase in the value of its exchange rate. All other things being equal, an economy is most likely to experience demand-pull inflationary pressure when it has. In the case of cost-push inflation, other things being equal: A) both the inflation rate and the unemployment rate rise at the same time. Assume that the sacrifice ratio for an economy is 4. reduces the money supply. Other things being equal, an expansion of commercial bank lending (Points : 4) changes the composition, but not the size, of the money supply. is desirable during a period of demand-pull inflation. Expectation of inflation in the near future This economic situation corresponds to the scenario when people expect inflation in the near future and hence buy things now to avoid buying at higher prices later. B) the unemployment rate rises but the inflation rate falls. A. a high rate of productivity growth. Once the expectation of inflation sets in, it's hard to eradicate. C) the inflation rate rises but the unemployment rate falls. C) the inflation rate rises but the unemployment rate falls. Cost-push inflation is the decrease in the aggregate supply of goods and services stemming from an increase in the cost of production. That increases demand, which then creates demand-pull inflation. 252. 20 All other things being equal, an economy is most likely to experience demand-pull inflationary pressure when it has A a high rate of productivity growth. C) the inflation rate rises but the unemployment rate falls. 8. B) the unemployment rate rises but the inflation rate falls. D) both the inflation rate and the unemployment rate fall. C. an increase in the value of its exchange rate. Q.21. There are many methods used to control inflation; some work well, while others may have damaging effects. Demand-pull inflation demonstrates the causes of price increases. D an increase in the rate of interest. 6. Answer: B- a positive output gap. ... which can outpace rising prices of other goods. 251. B) the unemployment rate rises but the inflation rate falls. Worst Cases of Hyperinflation in History ... generating a different kind of inflation called demand-pull inflation. Once people expect inflation, they will buy things now to avoid higher future prices. The sacrifice ratio measures the: Page 56 B. a positive output gap. C) the inflation rate rises but the unemployment rate falls. B a positive output gap. This increases demand and is one of the most common and healthy causes of demand pull inflation. Cost-push inflation shows how inflation, once it begins, is difficult to stop. In the case of demand-pull inflation, other things being equal: A) both the inflation rate and the unemployment rate rise at the same time. Stocks have a reasonable chance of keeping pace with inflation—but when it comes to doing so, not all equities are created equal. For example, businesses expected higher interest rates and inflation in the 1970s. 5. For … D) both the inflation rate and the unemployment rate fall. In the case of cost-push inflation, other things being equal: A) both the inflation rate and the unemployment rate rise at the same time. 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