Let Wages Be Indexed to Inflation by a Factor of 50

question 9

Multiple Choice

Let wages be indexed to inflation by a factor of 50 percent. A 1 percent price shock, in that case, ultimately produces an increase in prices of

• A) 1 percent.
• B) 2 percent.
• C) 3 percent.
• D) 1.5 percent.
• E) none of the above.

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Definitions:

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