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.

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Definitions:

Promissory Note

A promise in writing, signed by the maker, to pay a sum certain in money to the person named therein, or bearer, at some fixed or determinable future time, or on demand.

Maker

In finance, the maker is the party that creates or issues a promissory note, thereby agreeing to pay a certain amount of money to a payee at a future date.

Bearer

An individual in possession of an instrument, such as a check or bond, that is not made out to a specific payee.

Certified Cheque

A cheque guaranteed by a bank, indicating that the funds are available and have been set aside for the payee.