Given the Basic Rule of Thumb for the Relationship Among

question 90

Multiple Choice

Given the basic rule of thumb for the relationship among inflation, productivity and nominal wage increases, if wages rise by 5 percent and productivity increases 3 percent, one would predict inflation to be:

• A)−1 percent.
• B)0 percent.
• C)1 percent.
• D)2 percent.

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Definitions:

Decision Tree

A graphical representation of possible solutions to a decision based on certain conditions or probabilities.

Probability

The measure of the likelihood that an event will occur, expressed as a number between 0 and 1.

Coefficient of Variation

A measure of relative variability calculated as the standard deviation divided by the mean, often expressed as a percentage.