Select the normative statement that completes the sentence: If wages rise more rapidly than productivity:
A. profits will fall.
B. workers will earn 3/4 of GDP.
C. the rate of inflation increases.
D. policymakers should impose a wage ceiling.
Answer: D
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The circular flow diagram shows that
A) households spend all their income on goods and services. B) the value of total income is equal to the total value of expenditures on final goods and services. C) firms pay households wages, and households receive transfer payments from firms. D) GDP will be less than the total value of expenditures on final goods and services in the economy.
The short-run aggregate supply curve has a(n) ________ slope because as prices of ________ rise, prices of ________ rise more slowly
A) infinite; inputs; final goods and services B) positive; final goods and services; inputs C) infinite; final goods and services; inputs D) positive; inputs; final goods and services