Why are nominal wages sticky (adjust slowly) in the short run? wage contracts are made in nominal terms because interest rates adjust slowly the CPI adjusts quickly monetary policy takes time to affect nominal GDP
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Why are nominal wages sticky (adjust slowly) in the short run?
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wage contracts are made in nominal terms |
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because interest rates adjust slowly |
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the |
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- Which of the following is a true statement? The average price of goods and services in an economy is called the agg The aggregate price level is measured as the rate of change in the inflation Money or the money supply is defined as Federal Reserve notes. The inflation rate is measured as the rate of change in the federal government deficit.Amy Coney Barrett puts money into an account at Ruth Bader Ginsburg Bank. 12 months later she sees that she has 6 percent more euros and that her money will buy 4 percent more Ivanka Trump bobbleheads which perfectly track nominal national output (meaning statistically they move together). The nominal interest rate was Question 21 options: 10 percent and the inflation rate was 6 percent. 6 percent and the inflation rate was 2 percent. 4 percent and the inflation rate was 2 percent. 10 percent and the inflation rate was 4 percent.Stagflation is a combination of: a) increasing unemployment and increasing inflation b) decreasing unemployment and decreasing inflation c) increasing unemployment and decreasing inflation d) decreasing unemployment and increasing inflation
- Distinguish between the general inflation rate and the average inflation rate for specific goods?The CPI in Mexico has been increasing consistently recently. A change in expectations that reflects this trend results in a movement along(a movement along, an upward shift in , a downward shift in, no change)the short-run aggregate supply curve, (a movement along, an upward shift in , a downward shift in, no change) in the long-run aggregate supply curve, (a movement along, an upward shift in , a downward shift in, no change) in the aggregate demand curve, (a movement along, an upward shift in , a downward shift in, no change) in the short-run Phillips curve, and (a movement along, an upward shift in , a downward shift in, no change) in the long-run Phillips curve.Real and nominal variables are highly intertwined, and changes in the money supply change real GDP. Most economists would agree that this statement accurately describes both the short run and the long run. the short run, but not the long run. the long run, but not the short run. neither the long run nor the short run
- Use aggregate demand and aggregate supply to explain the inverse relationship between inflation and unemplymentThe graph shows an aggregate demand curve. Draw a curve that shows the effect on aggregate demand of an increase in the expected future inflation rate. Label it. 140- 130- 120- 110- 100- 90- Price level (GDP deflator, 2009=100) AD 99 80+ 11.0 11.5 12.0 12.5 13.0 13.5 14.0 14.5 15.0 Real GDP (trillions of 2009 dollars)You are given the following information about the economy: the nominal interest rate = 10 percent, and the real rate of interest = 3 percent. The inflation premium is
- Describe the inflation rate trend in the inflation rate graph provided.The most likely explanation for why the price index is rising is because People are receiving greater income from helicopter checks and extended unemployment benefits so they can be more discriminating buyers to find the lowest prices. People are receiving greater income from helicopter checks and extended unemployment benefits and the money is beginning to enter the real economy. Firms are receiving more orders so productivity is rising allowing inflation to ease. Businesses receive greater income so they have an incentive to expand capacity.Suppose the public expects a 7 percent inflation rate, while the Federal Reserve unexpectedly allows the money growth rate to be 4 percent. In the short run, we expect that investment spending by firms will and consumer durable spending will 000 decrease; decrease increase; increase decrease; increase increase; decrease
