The Reason Why Inflation Can Persist Even After Its Original

question 97

Multiple Choice

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

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

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Definitions:

Automobile Driving

The operation and control of a car, including the mastery of various techniques and understanding of road rules for safe transportation.

Marginal Cost

The additional cost incurred from producing one more unit of a good or service.

Moral Hazard

The situation where one party in an agreement is tempted to take undue risks because the negative consequences of the risk will be suffered by the other party.

Efficient Level

The optimal point of production or operation where costs are minimized and productivity or utility is maximized.