Assume That Workers and Businesses Are Sensitized to Inflation and Are

question 125

Multiple Choice

Assume that workers and businesses are sensitized to inflation and are quick to raise wages and prices in response to changes in the money supply. This implies that inflation is _____ and there are _____ adjustments of wages and prices of intermediate goods.

• A) high; quick
• B) low; quick
• C) high; slow
• D) low; slow

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Definitions:

Patterns of Behavior

Repeated actions or reactions that occur in a predictable manner, often based on habits, culture, or psychological conditioning.

Reactions

Emotional or behavior responses triggered by external or internal stimuli.

Events

Occurrences or happenings, especially ones of significance, that are planned or unforeseen.

Modes of Thinking

The various ways in which individuals process information and solve problems, influenced by cognitive styles and patterns.