Foziah is a policy maker who is very concerned about inflation. Should she support a law that will index federal workers’ pay to the inflation rate? Explain why or why not.
What will be an ideal response?
Student responses will vary but should make clear that Foziah should not support the indexing law because it could drive up inflation. A sample answer follows. Foziah should not support the law indexing federal employee pay to the inflation rate. When wages are indexed to inflation, they rise as prices increase. This immediate and comprehensive reaction to price increases leads to greater inflationary pressures. One price increase leads to a second, which in turn leads to a third, and so on.
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Given that the firm wants to sell both the versions, how high can the high-end professional knives be priced?
a. $60 b. $70 c. $80 d. $100
When the price of apples goes up:
A. the demand for apples will decrease, ceteris paribus. B. the demand for apples will increase, ceteris paribus. C. the quantity of apples demanded will decrease, ceteris paribus. D. the quantity of apples demanded will increase, ceteris paribus.
Relative percentage changes are used in measuring price elasticity of demand, so that
A) it does not matter whether price increases or decreases when calculating the elasticity. B) it does not matter what units are used to measure prices or quantities. C) we always obtain a positive number. D) larger numbers indicate greater responsiveness.
Which of the following product-groups is a leading export of the United States?
A. Home appliances B. Metals C. Agricultural products D. Computers