Which of the following is not an example of inflation causing a redistribution of income because the inflation was unanticipated?
A) A firm signs a 3-year contract with a union based on a 2 percent anticipated rate of inflation per year, and the actual rate of inflation ends up being 7 percent per year.
B) A worker receives a raise in salary that is less than the rate of inflation, because management under-predicted inflation.
C) Firms have to hire an extra worker to change prices in its store because of inflation.
D) A bank collects a lower amount of interest from a loan because inflation was under-predicted.
Answer: C
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A) lower the unemployment rate and inflation rate B) higher the unemployment rate and inflation rate C) higher the unemployment rate and the lower inflation rate D) lower the unemployment rate and the higher inflation rate
In the above figure, if this natural monopolist were unregulated, the profit maximizing firm would produce
A) at Q1 output rate. B) at Q2 output rate. C) at Q3 output rate. D) past the Q3 output rate.
For Elliot's dog-walking service, the only variable input is labor. Elliot's labor costs are $300 a day and his service walks 30 dogs per day. To walk 31 dogs per day, his labor costs increase to $305 a day. The marginal cost of walking that 31st dog is
A. $5. B. $9.83. C. $19.52. D. indeterminate from the information given.
Suppose that a rules-based monetary policy proposal specifies that the money supply will grow 5 percent each year. If velocity grows 2 percent this year and Real GDP grows 2 percent, the price level will __________ by __________ percent.
A. rise; 2 B. fall; 3 C. rise; 3 D. fall; 5 C. rise; 6