The Reason That Stagflation Tends to Follow an Inflationary Gap

question 76

Multiple Choice

The reason that stagflation tends to follow an inflationary gap is that

• A)output tends to fall even as prices continue to rise as part of the self-correcting mechanism.
• B)government officials tend to overact in controlling inflation.
• C)businesses try to increase profits by raising prices and increasing output.
• D)workers accept pay cuts to maintain employment.

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Definitions:

Pepsinogen

An inactive precursor to pepsin, a digestive enzyme that breaks down proteins in the stomach.

Peristaltic Contractions

Wave-like muscle contractions that occur in tubular structures of the body, such as the digestive tract, to move contents forward.

Large Intestine

A part of the gastrointestinal tract involved in water absorption and the formation of feces.

Mass Movements

The large-scale motions within the colon or large intestine involved in the transport of fecal material towards the rectum.