One Reason That Inflation Can Persist Even After Its Original

question 21

Multiple Choice

One reason that inflation can persist even after its original causes have been removed is that

• A)workers expect wage increases to match increases in labour productivity.
• B)workers are willing to accept wage increases lower than the increase in productivity.
• C)the Bank of Canada ensures that money-supply growth matches growth in real GDP.
• D)inflationary expectations cause the AS curve to continue shifting upwards.
• E)governments embark on a deficit-cutting program.

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Definitions:

Original Cost

The amount initially paid for an asset, not accounting for depreciation, inflation, or market value adjustments.

Short-Term Note

A debt instrument with a maturity of less than one year, used by companies to finance short-term obligations.

Legal Fees

Charges incurred for legal services provided by attorneys or law firms.

Delinquent Taxes

Taxes that have not been paid by the due date, often incurring penalties and interest.