Given the Basic Rule of Thumb for the Relationship Among

question 107

Multiple Choice

Given the basic rule of thumb for the relationship among inflation, productivity and nominal wage increases, if wages rise by 1 percent and productivity increases 2 percent, one would predict inflation to be:

• A)−1 percent.
• B)0 percent.
• C)1.5 percent.
• D)3 percent.

---

Definitions:

Convertible Bond

A financial instrument that can be converted into a predetermined amount of the company's equity at certain times during its life, usually at the discretion of the bondholder.

Par Value

This term denotes the officially stated value of a share of stock or bond, serving as a legal capital threshold that companies cannot issue stock below.

Current Market Value

The amount of money that could currently be received for selling an asset in the marketplace.

Par-value

The face value of a bond or the stated value of a stock, as defined in the corporate charter, which has little to do with its market value.