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.

---

Definitions:

Main Groups

Refers to the primary categories or segments into which organizational entities, data, or items are classified.

Accounting Principle

A rule or guideline that governs the financial reporting and accounting practices of a business.

Purchaser's Books

Records maintained by the buyer detailing purchases, expenses, and payables, essential for managing and tracking financial transactions.

Parcel of Land

A defined piece of land, identified for legal or development purposes, that can be owned, sold, or developed.