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.
Answer: A
You might also like to view...
In the figure above, with the rent ceiling the quantity of housing supplied is ________ units, the quantity demanded is ________ units, and the quantity rented is ________ units
A) 3,000; 6,000; 3,000 B) 3,000; 6,000; 6,000 C) 3,000; 6,000; 4,000 D) 3,000; 3,000; 3,000 E) 4,000; 4,000; 4,000
The above figure shows your budget line and indifference curves. What quantities of gasoline and movie rentals would you choose?
A) 25 gallons of gasoline and 15 movie rentals B) 10 gasoline and 10 movie rentals C) 20 gallons of gasoline and 5 movie rentals D) 15 gallons of gasoline and 8 movie rentals