Economists Who Believe That Long-Run Inflationary Bias Will Continue Base

Multiple Choice

Economists who believe that long-run inflationary bias will continue base their belief on the following factors:

A) Prices and wages tend to fall during periods of boom in a competitive economy;this tendency is reinforced by wage contracts that provide escalator clauses to keep wages in line with prices and by wage increases that are sometimes greater than increases in productivity.
B) During expansions,prices tend to remain stable rather than decrease because major unions have long-run contracts calling for annual wage increases no matter what economic conditions are at the time.
C) The tendency of small corporations to rely on non-price competition (advertising,and style and color changes) and to increase output rather than cut prices also keeps prices stable.
D) If prices rise drastically in a field,the government is likely to step in with programs to make up the shortage of supplies in the market.
E) none of the above are correct