ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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increase output in the short run.
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reduce output moderately.
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increase output dramatically.
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reduce output dramatically.
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Detailed explanation-1: -When prices creep up slowly over a period of several years at a rate of two or three percent per year, what is the LIKELY impact on production? Such inflation will probably: increase output in the short run.
Detailed explanation-2: -Creeping Inflation Creeping, or mild, inflation occurs when prices rise slowly. According to the Federal Reserve, when prices increase by 2% or less, it benefits economic growth. This kind of mild inflation makes consumers expect that prices will keep going up, which boosts demand.
Detailed explanation-3: -Creeping and Moderate Inflation Creeping – In this case, the price level increases very slowly over an extended period of time. Moderate – In this case, the rise in the price level is neither too fast nor too slow – it is moderate.
Detailed explanation-4: -Disinflation occurs when price inflation slows down temporarily. This term is commonly used by the U.S. Federal Reserve when it wants to describe a period of slowing inflation.
Detailed explanation-5: -Answer: Inflation may or may not result in an increase in production. Also, inflation has a positive impact on production as long as the economy does not reach full employment stage. Further, if the wages and production costs start rising rapidly, then it negatively impacts production activities.