If an increase in investment causes an increase in real output beyond the full-employment level,the result will be
A)Demand-pull inflation.
B)An increase in the recessionary GDP gap.
C)Cost-push inflation.
D)An increase in undesired inventories.

Question

Quizplus · Accepted Answer

If investment causes an increase in real output beyond the full-employment level, it means that resources are being overutilized, leading to an excess demand for goods and services. This excess demand can cause demand-pull inflation.

If an Increase in Investment Causes an Increase in Real