An increase in injections into the economy may lead to ?
Correct answer: A. An outward shift of aggregate demand- and demand-pull inflation
- A. An outward shift of aggregate demand- and demand-pull inflation
- B. An outward shift of aggregate demand and cost push inflation
- C. An outward shift of aggregate supply and demand-pull inflation
- D. An outward shift of aggregate supply and cost push inflation
Explanation
Injections such as investment, government spending, and exports add spending to the circular flow, shifting aggregate demand outward. If output cannot immediately expand enough, this creates demand-pull inflation.
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About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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