A sudden change in the normal behaviour of inflation,unrelated to the nation's output gap,is called
A) short-run equilibrium.
B) long-run equilibrium.
C) an inflation shock.
D) excessive aggregate demand.
E) inflation inertia.

Question

Quizplus · Accepted Answer

A sudden change in the normal behaviour of inflation, unrelated to the nation's output gap, is referred to as an inflation shock. This is typically caused by external factors such as changes in global oil prices or extreme natural disasters. In contrast, excessive aggregate demand results in a sustained increase in prices over time, and inflation inertia refers to the tendency for prices to keep rising even after the initial inflationary shock has passed. Short-run and long-run equilibrium refer to the balance between supply and demand in the economy and do not necessarily indicate a sudden change in inflation.

A Sudden Change in the Normal Behaviour of Inflation,unrelated to the Nation's