When inflation equals the value determined by past expectations and pricing decisions and output equals the level of short-run equilibrium output consistent with that inflation, the economy is said to be in ____ equilibrium.short-run
long-run
potential
full-employment

Question

19-12-2022
Business

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When inflation equals the value determined by past expectations and pricing decisions and output equals the level of short-run equilibrium output consistent with that inflation, the economy is said to be in ____ equilibrium.short-run
long-run
potential
full-employment

Answer :

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KrishnaMitra KrishnaMitra · Answer 1 · 2022-12-22T07:29:11-05:00

When inflation equals the value determined by past expectations and pricing decisions and output equals the level of short-run equilibrium output...inflation the economy is said to be in short-run equilibrium.

What are the causes of inflation?

Although it may appear through other economic processes, the main driver of inflation is an increase in the money supply. The following options are available to monetary authorities to increase a country's money supply :

Printing extra money to distribute to the public
Devaluing (decreasing) the value of the lawful tender money
by purchasing government bonds from banks on the secondary market, one can create reserve account credits for new loans through the banking system.

All of these circumstances lead to a decrease in the money's purchasing power. There are three different sorts of mechanisms that cause inflation as a result : built-in inflation, cost-push inflation, and demand-pull inflation.

So, option (a) can be regarded as suitable.

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When inflation equals the value determined by past expectations and pricing decisions and output equals the level of short-run equilibrium output consistent with that inflation, the economy is said to be in ____ equilibrium.short-run long-run potential full-employment

Answer :

What are the causes of inflation?

Other Questions

When inflation equals the value determined by past expectations and pricing decisions and output equals the level of short-run equilibrium output consistent with that inflation, the economy is said to be in ____ equilibrium.short-run
long-run
potential
full-employment