Suppose There Is an Inflationary Gap,and the Bank of Canada

question 81

Multiple Choice

Suppose there is an inflationary gap,and the Bank of Canada does not respond in any way to change its monetary policy.This scenario will lead to

• A)an increase in wages and an upward shift of the AS curve.
• B)a wage-price spiral.
• C)a permanent decrease in output.
• D)the emergence of a recessionary gap.
• E)reduced transactions demand for money,an increase in the price of bonds,and a lower rate of interest.

---

Definitions:

Segmented Income Statement

An income statement that shows the financial results of different segments of a company separately.

Contribution Format

A financial reporting format that highlights the variable costs associated with a product or service, used to calculate contribution margin.

Break-Even Sales

The amount of revenue required to cover total fixed and variable costs, beyond which a business starts generating profit.

Break-even Sales

The amount of revenue required to cover all fixed and variable costs, resulting in no profit or loss.