The Reason Why Inflation Can Persist Even After Its Original

question 41

Multiple Choice

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

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

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Definitions:

Historical Cost Principle

A financial reporting rule mandating that assets are documented and presented at their initial acquisition price.

Balance Sheet Reporting

The process of disclosing a company's financial health at a given moment by listing its assets, liabilities, and equity.

Financial Reporting

The process of disclosing financial results and related information by a company to its stakeholders.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing the ownership interest of shareholders in the company.