Explain how an increase in the unemployment rate will affect bargaining power and nominal wages
What will be an ideal response?
As the unemployment rate increases, it is more difficult for individuals to find employment at other firms. So, workers' bargaining power will fall. As bargaining power falls, the nominal wage will fall.
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How do you suppose most people form an expectation of future inflation? Is that method consistent with the assumption of adaptive expectations?
What will be an ideal response?
Refer to the table below. The figure for net transfers indicates that the United States:
The following table contains hypothetical data for the U.S. balance of payments in a year. Answer the following question on the basis of these data. All figures are in billions of dollars. U.S. goods exports +$390 U.S. goods imports -498 U.S. service exports +133 U.S. service imports -107 Net investment income +12 Net transfers -22 Capital account -5 Foreign purchases of U.S. assets +156 U.S. purchases of foreign assets -59 A. Received a net public and private transfer of $22 billion from the rest of the world B. Sent a net public and private transfer of $22 billion in remittances to the rest of the world C. Sent a net private transfer of $22 billion to the rest of the world D. Received a net private transfer of $22 billion from the rest of the world