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.
e
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Aggregate supply
A) is the overall wealth within an economy. B) is the total of all planned production in an economy. C) is the total amount of raw materials available in an economy. D) is the total amount of money circulating in an economy.
Consumption goods
A) include spending on machines and buildings so that goods can be produced in the future. B) are goods that are used to make other goods. C) include goods such as DVDs that firms hold in inventory. D) are only the goods bought by households for immediate satisfaction.