Expectations of Steady Inflation and Staggered Wage and Price Setting

question 87

Multiple Choice

Expectations of steady inflation and staggered wage and price setting are two reasons why

• A)the IA line is usually upward-sloping.
• B)inflation is highly variable during the short run.
• C)inflation does not change very much in the short run.
• D)inflation changes immediately after a change in real GDP.
• E)the IA line is usually downward-sloping.

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Definitions:

Annual Dividend

A payment made by a corporation to its shareholders, usually as a distribution of profits on a per-share basis each year.

Dividend Growth Model

A model that estimates the value of a company's stock based on its expected future dividends and their growth rate.

Market Rate

The market rate, often referred to as the going rate, is the standard or average interest rate, wage, or price charged or paid for a specific good, service, or asset in a specific market.

Equity Securities

Financial instruments that represent ownership interest in a company or corporation, such as common stock.