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Author Question: Gretchen expects the price level to rise from 104 this year to 108 next year, and she is able to ... (Read 55 times)

HCHenry

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on: Jun 29, 2018
Gretchen expects the price level to rise from 104 this year to 108 next year, and she is able to incorporate these expectations into her wage contract. If the price level rises to 106 next year instead of 108, which of the following will occur?
 
  A) Gretchen's real wage will be unchanged.
  B) Gretchen's real wage may rise or fall, depending on the unemployment rate.
  C) Gretchen's real wage will fall.
  D) Gretchen's real wage will rise.

Question 2

If actual inflation is less than expected inflation, actual real wages will be ________ expected real wages and unemployment will ________.
 
  A) less than; rise B) less than; fall C) greater than; rise D) greater than; fall


choc0chan

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Reply #1 on: Jun 29, 2018
Answer to Question 1

D

Answer to Question 2

C


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