Which of the following statements would you DISAGREE with Explain why ? 1. Higher than anticipated inflation increases the real wage rate (  adjusted for inflation )  and workers gain at the expense of employers who lose. 2. The consequences of anticipated inflation include transaction costs tax consequences and increased uncertainty. 3. if the nominal interest rate is 10 percent the inflation rate is 6 percent and the tax rete is 20 percent the real after tax interest rate is 1 .5 percer  4. If the money wage rate is $25.00 an hour and the price level is 125 the real wage rate is $20.00.

Unanticipated inflation Unanticipated inflation penalises:       A.  those earning incomes that are taxed in nominal terms     B.  those who hold cash     C.  those who lend money at a fixed interest rate     D.  those earning incomes that are taxed in nominal terms, those who hold cash and those who lend money at a fixed interest rate

Negative real interest rates occur when the inflation rate is greater than the nominal interest rate. True or false?   a. False   b. True

The table below shows the annual change in the average nominal wage and inflation rate since 2008. a. Compute the percentage change in real income for each year shown in the table. Instructions: In part a, round your answers to two decimal places. In parts b and c, enter your answers as a whole number. If entering a negative number, include a minus sign. Percentage Changes in Nominal Income and Prices Year 2008 2009 2010 2011 2012 2013 Annual Inflation Rate (percent) 3.78% -0.39 1.6 3.09 2.02 1.42 Annual Nominal Wage Growth (percent) 0.31% -1.1 -0.69 1.27 2.46 2.07 Annual Real Wage Growth (percent) b. Of the years listed above, the paycheck of the average worker declined in c. Of the years listed above, the purchasing power of the average worker declined in of the six years. d. The average real income of households can increase whether the nominal wage increases or decreases of the six years.