Suppose That Product Prices Start Rising but Nominal Wages Do

question 6

Multiple Choice

Suppose that product prices start rising but nominal wages do not. In that case,

• A) real wages will fall and firms will want to produce more because doing so will be profitable.
• B) real wages will rise and firms will want to produce more because doing so will be profitable.
• C) there will be a surplus of goods and services produced.
• D) there will be a shortage of goods and services produced.

---

Definitions:

Neutrality Acts

Series of laws passed between 1935 and 1939 to keep the United States from becoming involved in war by prohibiting American trade and travel to warring nations.

Arms Sale

The transaction and distribution of military weapons, equipment, and technology between countries or entities.

Freedom House

An independent watchdog organization dedicated to the expansion of freedom and democracy around the world through research, advocacy, and policy engagement.

Mahatma Gandhi

An Indian lawyer, anti-colonial nationalist, and political ethicist who led the campaign for India's independence from British rule through nonviolent resistance.