Suppose workers expect the inflation rate to be 3.6 percent and they receive a nominal wage increase of 7.5 percent. If the actual inflation rate turns out to be 2.8 percent, workers will receive a lower real wage than expected
a. True
b. False
Indicate whether the statement is true or false
False
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A government runs a deficit when its government revenues exceed expenditures
Indicate whether the statement is true or false
If the government engages in contractionary fiscal policy a likely reason would be:
A. they think the economy is not growing fast enough and they want to speed it up. B. people are not spending enough money and they want to boost spending. C. the economy is operating at a level that is just below full employment. D. they think the economy is growing too quickly and they want to slow it down.
_____ is the reward savers earn for deferring consumption.
Fill in the blank(s) with the appropriate word(s).
The income effect is the change in the quantity demanded of a good that results from
a. the effect of a change in the price on consumer purchasing power. b. the effect of a change in the price making the good more or less expensive relative to other goods, holding constant the effect of the price change on consumer purchasing power. c. either (a) or (b). d. none of the above.