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:

Collective Agreements

Contracts between employers and a group of employees that outline the terms of employment, including wages, working conditions, and dispute resolution procedures.

Constructive Dismissal

Employer termination of a contract of employment by a substantial, unilateral change in the terms or conditions of employment.

Fundamental Breach

A breach of the contract that goes to the root of the agreement.

Termination without Cause

The ending of an employment or contractual relationship without the need to prove wrongdoing or failure to perform duties by the terminated party.