Employees at the university have negotiated a 5 percent increase in wages for the next year, based on their inflation expectations. If inflation is actually 6 percent over the next year, which of the following will occur?
A) Inflation will be 5 percent the following year.
B) Real wages for university employees will fall.
C) The increase in inflation is expected.
D) Unemployment of university employees will rise.
B
Economics
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If workers and firms raise their inflation expectations,
A) unemployment will fall. B) the short-run Phillips curve will be vertical. C) the short-run Phillips curve will shift upward. D) actual inflation will fall to match expected inflation.
Economics
Consider the demand curve of the form Q = a - bP. If a is a positive real number, and b = 0, then demand is
A) completely inelastic. B) inelastic, but not completely. C) unit elastic. D) elastic, but not infinitely.
Economics