A once-and-for-all increase in the price of a raw material,such as crude oil,will
A)not be inflationary,because this is,simply,"high prices."
B)have a short-run inflationary effect and reduces employment.
C)have no effect on inflation because this is the price of a raw material,not a final good.
D)both A and C are correct

Question

Quizplus · Accepted Answer

A once-and-for-all increase in the price of a raw material such as crude oil will have a short-run inflationary effect because it will increase the cost of production for many goods and services, which can lead to higher prices for consumers. Additionally, it may reduce employment in industries that rely heavily on the raw material, as they may have to cut back on production or lay off workers to offset the increased cost. Option A is incorrect because high prices can lead to inflation, especially if they persist over time. Option C is also incorrect because the price of a raw material can have a significant impact on the prices of final goods and services.

A Once-And-For-All Increase in the Price of a Raw Material,such