TOEFL Question
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CLI 아카데미
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2018-06-27 18:03
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1009
Economics
In economics, inflation is the process that leads to increased prices for all goods and services. Generally, inflation is seen as negative because it lowers the value of money. For example, after inflation, one dollar cannot buy as much as it did before inflation. Many factors contribute to inflation, and economists have formulated several theories to explain why it happens. Two popular theories of inflation are demand-pull inflation and cost-push inflation.
The theory of demand-pull inflation is associated with John Maynard Keynes. Keynes was an important 20th century economist. According to Keynesian economics, demand-pull inflation occurs when the demand for a product, or good, increases. Increased demand means that the product will eventually become scarce. With less of the product available, it costs more for people to purchase it. Thus, consumers effectively bid up the price of the product. Indeed, demand-pull inflation is usually described as a situation in which “too much money is spent chasing too few goods” Economists have isolated several factors that cause demand-pull inflation, such as increases in the supply of currency, in government purchases, or in exports.
Cost-push inflation also originates in Keynesian economics. The theory holds that inflation occurs when the price of production rises significantly. If it costs more to make something, companies must increase the price they charge the consumer in order to remain profitable. This situation is commonly seen when companies increase their employees’ wages. If businesses must pay their workers more, they must in turn charge more for the goods or services they produce. Another cause of cost-push inflation is seen when the price of raw materials rises. For instance, if it costs a company more to important metals used in manufacturing, it must pass this increase on to the consumer.
Effectively: in effect
Isolate: to separate something from its other parts
Export: to send goods to another country to sell
Production: the process of making things to be sold
Profitable: able to make money
Raw materials: goods that are not manufactured
Import: to buy products from another country
Q. The word formulated in the passage is closest in meaning to
(A) researched
(B) decreased
(C) conceived
(D) argued
A>C