The Three Figures Below Show the Phases of a Disinflation

Multiple Choice

The three figures below show the phases of a disinflation.In part (i) ,the economy is experiencing a sustained inflation at E₁. FIGURE 29-4 Refer to Figure 29-4,part (i) .The elimination of the inflationary gap would normally be initiated by

A) workers accepting a reduction in their wage growth.
B) an increase in the productivity of workers.
C) the Bank of Canada engaging in an expansionary monetary policy.
D) the Bank of Canada stopping the ongoing monetary expansion.
E) the government engaging in tax cuts and increasing transfer payments.