A Basic Rule of Thumb to Predict Inflation Is That

question 160

Multiple Choice

A basic rule of thumb to predict inflation is that it equals:

• A)real wage increases minus productivity growth.
• B)productivity growth plus nominal wage increases.
• C)productivity growth minus nominal wage increases.
• D)nominal wage increases minus productivity growth.

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Definitions:

Consumer Surplus

The gap between what consumers are prepared and capable of paying for a product or service and what they end up spending.

Supply Change

An alteration in the quantity of goods or services that producers are willing and able to sell in the market, due to factors like price, technology, or input costs.

Consumer Surplus

The difference between the total amount consumers are willing to pay for a good or service and the total amount they actually pay.

Producer Surplus

The difference between what producers are willing to accept for a good versus what they actually receive, evidencing economic benefit.