The Reason Why Inflation Can Persist Even After Its Original

question 97

Multiple Choice

The reason why inflation can persist even after its original causes have been removed is that

• A)workers expect wage increases to match increases in labour productivity.
• B)workers are willing to accept wage increases lower than the increase in productivity.
• C)the Bank of Canada ensures that money-supply growth matches growth in real GDP.
• D)inflationary expectations cause the AS curve to continue shifting upwards.
• E)governments embark on a deficit-cutting program.

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Definitions:

Qualitative Forecasts

Forecasting methods that use expert judgement rather than numerical data to predict future events or trends.

Delphi Technique

A method used for collecting and distilling the collective expertise of a group of experts through rounds of questionnaires, often used in forecasting and decision making.

Regression Analysis

A statistical method used to examine the relationship between one dependent variable and one or more independent variables.

Trend Analysis

A forecasting method that extrapolates from historical trends.