What will tend to happen to wages if workers and employers foresee inflation?
a. Both parties will seek to reduce nominal wages and therefore keep real wages the same.
b. Nominal wages will remain constant but real wages will increase to avoid the effects of inflation.
c. Inflation erodes purchasing power of workers, and real wages are unchanged.
d. Nominal wages will increase by an amount that keeps real wages constant.
d
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The figure above could represent the long-run equilibrium for a
A) perfectly competitive firm. B) monopolistically competitive firm. C) monopoly. D) firm facing inelastic demand at all outputs.
Which of the following can be considered an example of cyclical unemployment?
a. A recent graduate searching for his first job b. A ski instructor looking for a part-time job during the summer c. An engineer looking for a new job after losing his job during a recession d. A typist looking for a new job as his skills are not needed in the current labor market
Using the vertical long-run aggregate supply curve, an increase in the aggregate demand for an economy would have which of the following effects in the long-run?
A) An increase in government spending to shift aggregate demand to the right. B) An increase in aggregate output and a rise in the price level. C) No change in aggregate output and a fall in the price level. D) No change in aggregate output and a rise in the price level.
Discretionary fiscal policy
A. would have a larger effect on real GDP if the multiplier was smaller. B. may not have desired effects on real GDP because it leads to increases in aggregate demand. C. may not have desired effects on real GDP because of the time lags. D. may not have desired effects on real GDP because it leads to decreases in aggregate demand.