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:

Mexican Pesos

The currency of Mexico, represented by the symbol $ or MXN, used as the primary medium of exchange within the country.

Exchange Rate

the price of one currency in terms of another currency, determining how much foreign currency can be exchanged for a unit of domestic currency.

Lawn Mower

A machine utilizing revolving blades or a blade reel to cut a grass surface to an even height, widely used in garden maintenance.

Average Rate of Return

A financial ratio that calculates the expected return on an investment relative to its initial cost.