Suppose There Is an Inflationary Gap,and the Bank of Canada

Multiple Choice

Suppose there is an inflationary gap,and the Bank of Canada does not respond in any way to change its monetary policy.This scenario will lead to

A) an increase in wages and an upward shift of the AS curve.
B) a wage-price spiral.
C) a permanent decrease in output.
D) the emergence of a recessionary gap.
E) reduced transactions demand for money,an increase in the price of bonds,and a lower rate of interest.