The Three Figures Below Show the Phases of a Disinflation

question 71

Multiple Choice

The three figures below show the phases of a disinflation.In part (i) ,the economy is experiencing a sustained inflation at E₁. FIGURE 29-4 Refer to Figure 29-4,part (ii) or (iii) .A movement of the economy from E₃ to E₂ could be due to

• A)a slow fall in wages due to the recessionary gap.
• B)an expansionary monetary policy.
• C)a contractionary monetary policy.
• D)a rise in unit costs caused by falling wages.
• E)a positive aggregate demand shock.

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Definitions:

Statement Of Comprehensive Income

A financial statement that includes all changes in equity during a period except those resulting from investments by and distributions to shareholders.

Net Working Capital

The difference between a firm's current assets and its current liabilities, indicating the short-term financial health and working capital efficiency of the business.

Total Assets Ratio

A financial metric that compares the value of a company's total assets to another relevant value, often used in financial analysis to gauge company size or efficiency.

Financial Position

A snapshot of a company's assets, liabilities, and equity at a specific point in time, indicating its financial health.