________ is defined as national income + transfers - taxes. A) ...

[burchfield96]

________ is defined as national income + transfers - taxes.
 
  A) Disposable income B) Personal income
  C) GDP D) Gross private domestic investment

Question 2

Workers at a local construction company are paid 32.50 per hour, and they have incorporated a 4 percent annual raise in their contracts to account for expected inflation.
 
  Explain how unexpected inflation of 2 percent will affect the real wages earned by these workers and the unemployment rate of these workers.

[scrocafella]

Answer to Question 1

A

Answer to Question 2

If actual inflation is 4, a 4 increase in wages will allow workers to maintain their real wage. However, if inflation is lower than expected (2 instead of 4), the 4 increase in wages will increase the real wage, and firms will hire fewer workers than they had planned. As a result, unemployment will rise.