The Three Figures Below Show the Phases of a Disinflation

question 75

Multiple Choice

The three figures below show the phases of a disinflation. In part i) , the economy is experiencing a sustained inflation at E 1.
FIGURE 29-4
-Refer to Figure 29-4, part iii) . The movement of the economy from E3 to E4 in Phase 3 is often caused by

• A) workers accepting a reduction in their wages.
• B) an increase in the productivity of workers.
• C) the Bank of Canada implementing an expansionary monetary policy.
• D) an increase in the unemployment rate.
• E) inflationary expectations that cause wages to continue rising.

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