If the Economy Is Faced with Continued Negative Supply Shocks,such

question 40

Multiple Choice

If the economy is faced with continued negative supply shocks,such as annual wage increases for unionized workers,and there is no monetary validation,we can expect

• A)an inflationary gap.
• B)a one-time rise in the price level.
• C)rising unemployment until the wage increases cease,or are offset by other wage decreases.
• D)a shrinking output gap.
• E)peace in labour-management relations.

---

Definitions:

Capital Lease

A lease classified as a financial transaction where the lessee essentially buys an asset and finances it over time.

Straight-Line Method

A depreciation method that allocates an equal amount of the depreciable cost of an asset to each year of the asset's useful life.

Capital Lease

An agreement that grants the lessee the right to use an asset for a long period, typically seen as a purchase by the lessee for accounting purposes.

Original Amount

The initial sum of money involved in a financial transaction, before any deductions, depreciation, or appreciation.