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11.Which of the following would lead to the most inflation?

a.Both aggregate demand and aggregate supply increase.

b.Both aggregate demand and aggregate supply decrease.

c.Aggregate demand increases and aggregate supply decreases.

d.Aggregate demand increases and aggregate supply increases.

e.Aggregate supply decreases.

12.The difference between demand-pull inflation and cost-push inflation is that

a.demand-pull inflation is caused by movements of the aggregate supply curve; cost-push inflation is caused by changes in firms%26#039; costs of production

b.cost-push inflation is caused by movements of the aggregate demand curve; demand-pull inflation is caused by cyclical activity in the economy

c.demand-pull inflation is caused by movements of the aggregate demand curve; cost-push inflation is caused by movements of the aggregate supply curve

d.demand-pull inflation is caused by government deficit spending; cost-push inflation is caused by firms

e.demand-pull inflation is caused by foreign demand; cost-push inflation is caused by domestic production problems

13.Which is true of cost-push inflation?

a.It occurs when the aggregate demand curve shifts rightward.

b.It occurs when the aggregate supply curve shifts rightward.

c.It results in a decrease in the unemployment rate.

d.It results in a movement along the aggregate demand curve.

e.It is caused by the same factors that lead to demand-pull inflation.

14.What was the result of increased oil prices during the 1970s?

a.Aggregate demand decreased, causing cost-push inflation.

b.Aggregate demand increased, causing demand-pull inflation.

c.Aggregate supply increased, causing demand-pull inflation.

d.Aggregate supply increased, causing cost-push inflation.

e.Aggregate supply decreased, causing cost-push inflation.

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11 - c

Prices rise when demand rises or when supply falls.

12 - c.

Demand-pull inflation is when demand increases more than supply, thus increasing prices, and cost-push inflation is when supply decreases due to cost increases, also increasing prices.

13 - d.

Cost-push inflation comes as a result of decreased supply, i.e. the supply curve shifting to the left. Demand is unaffected, so the equilibrium price and quantity will move along the current aggregate demand curve.

14 - e.

This one seems to be the only likely answer given the question.

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c, c, d, e, i think but am not sure