Assume that an unemployed person expects inflation to be 4.5 percent. In reality, inflation turns out to be 2.9 percent. If wage expectations lag behind actual price changes:
a. job offers below the reservation wage will decline, and the unemployment rate will rise.
b. job offers above the reservation wage will rise, and the unemployment rate will fall.
c. job offers above the reservation wage will decline, and the unemployment rate will rise.
d. job offers above the reservation wage will decline, and the unemployment rate will fall.
e. job offers below the reservation wage will increase, and the unemployment rate will fall.
c
You might also like to view...
The U.S. financial system is a(n) __________ system
A) markets-oriented B) angel financing C) banking-oriented D) loan committee
Buyers and sellers always share the burden of a tax equally
a. True b. False Indicate whether the statement is true or false
The profit that a monopolist earns represents a loss to society that is measured through deadweight loss
a. True b. False Indicate whether the statement is true or false
A political candidate promises voters more funding for AIDS research and child care and assures them they will not have to sacrifice any other goods or services to obtain the additional programs.
A. This may be possible if the economy has unemployed resources. B. This is possible only in a fully employed economy. C. This is possible if the economy is producing on its production possibilities curve. D. None of the choices are possible.