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.
Correct Answer:
Verified
Q158: Recessionary gaps usually lead to
A)structural unemployment.
B)cyclical unemployment.
C)seasonal
Q159: Figure 10-4 Q160: What is the principal reason that economists Q161: The existence of an inflationary gap should Q162: The existence of an inflationary gap would Q164: Part of the normal aftermath of a Q165: A period of stagflation is the normal Q166: Stagflation is the conjunction of Q167: Equilibrium GDP in excess of potential GDP Q168: The principal way in which an economy
A)stagnation and recession.
B)inflation
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