Workers and firms both expect that prices will be 2.5% higher next year than they are this year. As a result
A) workers will be willing to take lower wages next year, but not lower than a 2.5 percent decrease.
B) the purchasing power of wages will rise if wages increase by 2.5%.
C) the short-run aggregate supply curve will shift to the left as wages increase.
D) aggregate demand will increase by 2.5%.
Answer: C
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An inward shift of the production possibilities frontier represents
A) negative economic growth. B) a rise in the unemployment rate. C) technological improvement. D) positive economic growth.
A cereal producer finds that when Steve McNair, the quarterback for the Tennessee Titans, endorses its product, its annual income increases from $1 million to $3 million. If the interest rate is 10 percent, the present value of Steve's name is
a. $.2 million b. $3 million c. $10 million d. $20 million e. infinite