Q23 · Practice questionComplex familiar1 mark
QUESTION 23
If households expect prices to rise rapidly next year, they may bring purchases forward. Initially, this can
(A)
reduce current aggregate demand in every case.
(B)
expand productive capacity immediately.
(C)
increase current aggregate demand.
(D)
eliminate cost-push inflation.
WORKED SOLUTION
1 markAnswer C
Answer
C
Working
Bringing purchases forward increases current consumption and demand. Expectations can therefore reinforce inflation pressure; they do not instantly create new supply.
Marking criteria
- Select C. [1 mark]
Practice question aligned to the current QCAA syllabus; review the worked solution and marking criteria.
View the QCAA syllabus