17.Suppose the inflation rate is 6 percent this year. If nominal wages increase

Question

17.Suppose the inflation rate is 6 percent this year. If nominal wages increase by 6 percent, real wages will
Select one:
a. increase by 6 percent.
b. increase by 9 percent.
c. decrease by 12 percent.
d. not change.
18.Suppose workers negotiate for a 5 percent nominal wage increase and expect a 1 percent inflation rate. If the actual inflation rate is 6 percent, then workers
Select one:
a. and firms are both better off.
b. are better off and firms are worse off.
c. are worse off and firms are better off.
d. and firms are both worse off.
19.The velocity of money is equal to nominal GDP divided by the money supply.
Select one:
True
False

Explanation / Answer

17.Suppose the inflation rate is 6 percent this year. If nominal wages increase by 6 percent, real wages will
Select one:
a. increase by 6 percent.
b. increase by 9 percent.
c. decrease by 12 percent.
d. not change.
18.Suppose workers negotiate for a 5 percent nominal wage increase and expect a 1 percent inflation rate. If the actual inflation rate is 6 percent, then workers
Select one:
a. and firms are both better off.
b. are better off and firms are worse off.
c. are worse off and firms are better off.
d. and firms are both worse off.
19.The velocity of money is equal to nominal GDP divided by the money supply.
Select one:
True
False

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