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At Full Employment an Increase in the Quantity of Money

Question 2

Multiple Choice

At full employment an increase in the quantity of money (ceteris paribus) can create a


A) demand-pull inflation, as can an increase in government expenditure.
B) demand-pull inflation, but an increase in government expenditure cannot.
C) cost-push inflation, as can an increase in government expenditure.
D) cost-push inflation, but an increase in government expenditure cannot.
E) demand-pull and a cost-push inflation, as can an increase in government expenditure.

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