In the Long Run, What Event(s) Can Lead to an Increase

question 32

Multiple Choice

In the long run, what event(s) can lead to an increase in inflation without changing the unemployment rate above its natural level?

• A)a tax decrease combined with a government spending decrease
• B)an increase in government spending combined with restrictive monetary policy
• C)an adverse supply shock
• D)an adverse supply shock accommodated by expansionary monetary policy
• E)a favorable supply shock

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Definitions:

Cumulative Preferred

Refers to preferred stock where dividends accumulate if not paid out, with these unpaid dividends required to be paid out before any dividends can be issued on common stock.

Treasury Stock

Shares that were issued and subsequently reacquired by the issuing company, reducing the amount of outstanding stock.

Income Statements

A financial statement that shows a company's revenues, expenses, and net income over a specific period, summarizing its financial performance.

Stock Dividends

Stock dividends are a form of dividend payment made by a corporation to its shareholders in additional shares of stock, instead of cash.