Cost-push inflation is caused by:
a. an increase in short-run aggregate supply.
b. a decrease in short-run aggregate supply.
c. an increase in long-run aggregate supply.
d. a decrease in long-run aggregate supply.
Question 2
In the presence of the crowding out effect, the purchase of Treasury bonds by the government will result in:
a. an increase in the interest rates.
b. a decrease in the price of bonds.
c. a decline in the private sector spending.
d. an increase in the private sector spending.
e. a decrease in the rate of inflation.
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How to create a price index to calculate inflation for a basket of goods