Read and match the following correctly:
(Monetary Policy) (Contractionary Fiscal Policy) (Government Expenditure) (Monetary Policy Tool) (Monetary Policy Tool)
Demand Pull Inflation
A rise in general price is called:
An increase in money supply into economy may lead to:
An increase in raw material costs will:
When people change jobs or enter the workforce
The Philip’s curve shows the relationship between inflation and what?
Cost-push inflation may be caused by:
Increase in wages will result in:
An outward shift in demand curve will lead to:
Inflation might affect a country’s international competitiveness by making exports relatively expensive reducing the competitiveness of a country.
Deflation occurs when there is a fall in the general price level.
Consumers may decide to hold back on spending because they are waiting for prices to fall further. This will reduce demand and may lead to more deflation. This can create a deflationary spiral.
In the long run the Phillips curve suggests there is no trade-off between inflation and unemployment.
Unanticipated may not be planned for and therefore may lead to significant shifts in investment or consumption when consumers or businesses are faced with unexpected increase in prices.
Aggregate demand shifts outwards. This increase prices and output.
Aggregate supply shifts inwards. This increases prices and reduces output.
Greater money supply can boost aggregate demand leading to higher prices and output.
An increase in the money supply is an example of expansionist monetary policy.
An increase in interest rates is an example of expansionist monetary policy.
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