Illustrate multiple choice problems about Demand-pull inflation, money creation, quantity theory of money.
1. Demand-pull inflation starts as the:
a) LAS curve shifts leftward.
b) LAS curve shifts rightward.
c) AD curve shifts rightward.
d) AD curve shifts leftward.
2. A bank creates money by:
a) lending its excess reserves.
b) purchasing currency from the Federal Reserve.
c) buying bonds from the Federal Reserve.
d) printing more checks.
3. The quantity theory of money asserts that inflation is the result of growth in:
a) the quantity of money.
b) potential GDP.
c) the natural rate of unemployment.
d) money wages.