If the Economy Is Faced with Continued Negative Supply Shocks

question 16

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

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Definitions:

General Ledger

A comprehensive collection of a company's accounts and transactions, serving as the foundation of the accounting system.

Controlling Account

The account in the general ledger that summarizes the balances of the accounts in a subsidiary ledger.

Purchases Journal

The purchases journal is a financial record keeping system where a business logs all purchases of inventory on credit, excluding cash purchases.

Store Supplies

Consumable items used in the day-to-day operations of a retail store, such as bags, cleaning materials, and office supplies.