Economics - Economics Section 2
- Option : A
- Explanation : Core inflation excludes food and energy prices. It is therefore less volatile compared to headline inflation.
- Option : C
- Explanation : The CPI is typically used for this purpose, while the PPI is more closely connected to business contracts.
33. In the short-run, a demand-pull inflation will most likely result in an increase in:
- Option : C
- Explanation : The effect of demand-pull inflation is an increase in the aggregate demand, which in turn, leads to an increase in commodity prices in the short run.
34. A disease that increases employee illness will most likely increase:
- Option : B
- Explanation : By increasing employee illness, the disease will decrease the output per hour per worker, which will increase the unit labor cost. As, the unit labor cost increases, cost-push inflation increases.
- Option : A
- Explanation : When unemployment is below NAIRU, there is a shortage of labor that pushes up labor cost.
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