Which of the following statements is true ?
A) Demand-pull inflation is caused by insufficient total spending.
B) Cost-push inflation is caused by an increase in resource costs.
C) If nominal interest rates remain the same and the inflation rate rises, real interest rates increase.
D) If real interest rates are positive, lenders incur losses.

Question

Quizplus · Accepted Answer

Cost-push inflation is caused by an increase in resource costs. Demand-pull inflation is caused by an increase in total spending. Option C is false as real interest rates decrease when inflation rate rises, assuming nominal interest rates remain constant. Option D is false as positive real interest rates indicate that lenders earn returns, not incur losses.

Which of the Following Statements Is True