When jobs are easy to find, wage increases are frequently given, and businesses are doing well, the economy is most likely in a(n):

A labor union anticipates a 7 percent inflation rate in each of the next three years. It wants to obtain a 3 percent increase in real wages in each of those three years. To obtain this goal, the requisite nominal wage hike it should negotiate is

a. 7 percent each year b. 3 percent each year c. 10 percent each year d. 10 percent the first year and 3 percent each year thereafter e. 21 percent the first year and 3 percent each year thereafter

Suppose that last year you borrowed $100 at 5 percent interest to purchase a $100 pair of Nike cross-training shoes. This year you repaid the bank with interest. If the inflation rate was 10 percent last year (so the price of shoes rose to $110), your purchase of the shoes would

a. make you an inflation winner because you gained $5 by borrowing rather than waiting the year to buy the shoes b. make you an inflation loser because you paid $5 more than you should have for the shoes c. not be affected at all by the inflation rate because the shoes were already purchased d. be valued at $100 e. be valued at $110 multiplied by the inflation rate