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 workers' productivity causes inflation, which in turn increases workers' productivity.
c. A decrease in prices causes workers to demand higher wages, which in turn puts additional downward pressure on prices.
d. An increase in the price level lowers real wages leading to unemployment. This in turn puts downward pressure on prices.
a
You might also like to view...
In the 1980s national savings declined as a percentage of GDP. Assuming that domestic private investment's percentage share has not declined, this situation requires, ceteris paribus,
A) net foreign investment (NX) to decrease. B) net foreign investment (NX) to increase. C) U.S. exports to decrease. D) A and C are both necessary outcomes.
What is the difference between a bank run and a bank panic? How might a bank run and asymmetric information lead to a bank panic?
What will be an ideal response?
Net exports:
a. will increase if exports of goods decline. b. will increase if imports of goods rise. c. in our GDP accounts permit estimation of foreign ownership of American businesses. d. include budgetary outlays of the federal government. e. is the net effect of the foreign trade sector on GDP.
Which of the following is true in a market economy?
A. Central planners determine answers to the basic economic questions. B. Resources are used efficiently. C. The distribution of wealth is equal. D. Information for production and distribution decisions pass directly to buyers from the government.