Which of the Following Would Transfer Wealth from the Old

question 33

Multiple Choice

Which of the following would transfer wealth from the old to the young?

• A) increases in the budget deficit
• B) decreased building of highways and bridges
• C) more generous education subsidies
• D) indexation of pensions to inflation

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Definitions:

Nominal Wage

The amount of money paid to employees without adjustment for inflation or purchasing power.

Price Level

An index that measures the average of the prices over a range of products and services, reflecting the cost of living or inflation.

Real Wage

This is the purchasing power of a person's earnings, considering the effects of inflation on buying goods and services.

Expected Price Level

The average price level for goods and services anticipated by individuals and organizations, affecting consumption and investment decisions.