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Question22 An economy starts at its long-run values. A recession will then cause the inflation rate to increase, because firms seek to sell more. the inflation rate to decrease, because firms seek to sell less. the inflation rate to increase, because firms seek to sell less. the inflation rate to decrease, because firms seek to sell more. ResetMaximum marks: 1 Flag question undefined
Options
A.the inflation rate to increase, because firms seek to sell more.
B.the inflation rate to decrease, because firms seek to sell less.
C.the inflation rate to increase, because firms seek to sell less.
D.the inflation rate to decrease, because firms seek to sell more.
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Standard Answer
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Approach Analysis
The question describes an economy starting at long-run values experiencing a recession, and asks how the inflation rate would respond.
Option 1: 'the inflation rate to increase, because firms seek to sell more.' In a recession, aggregate demand falls, not increases; firms typically do not seek to sell more during a down......Login to view full explanationLog in for full answers
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Similar Questions
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