Author Question: Assume that workers have perfect information about changes in inflation. Which of the following ... (Read 63 times)

tichca · **on:** Jun 30, 2018

Assume that workers have perfect information about changes in inflation. Which of the following statements is true in this context?
a. Wage rates will not adjust immediately to the price level on account of the fixed contracts.
b. The aggregate supply curve of the economy will become perfectly elastic.
c. The aggregate supply curve will shift to the right.
d. Nominal wage rates will always exceed the real wage rate.
e. The economy will continue to produce at the potential level of real GDP.

Question 2

The larger the proportion of income spent on a product, other things equal, the:
a. more unit elastic is a consumer's demand.
b. more elastic is a consumer's demand.
c. more inelastic is a consumer's demand.
d. more vertical is a consumer's demand curve.