Which of the following correctly describes a wage-price spiral?
a. An increase in nominal wages causes inflation, and inflation causes workers to demand even higher wages in order to keep their real income constant. This cycle can repeat itself.
b. An increase in real wages due to growth in worker productivity causes inflation, which in turn increases worker productivity.
c. A decrease in prices causes workers to demand higher wages, which in turn puts additional downward pressure on prices.
d. None of the above.
a
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The Latin expression Ceteris paribus means:
a. everything else being equal. b. economic model. c. economists are partly right. d. partial scarcity is certain.
In order to safeguard the proper functioning of our monetary system, in 1913 Congress created the
a. Treasury Department b. FDIC c. National Bank Act d. future funds rate e. Federal Reserve System
Which of the following is included in M2 but not in M1?
a. demand deposits b. corporate bonds c. large time deposits d. money market mutual funds
Using Figure 1 above, if the aggregate demand curve shifts from AD1 to AD2 the result in the short run would be:
A. P1 and Y2. B. P3 and Y1. C. P2 and Y2. D. P2 and Y3.