In the Cost-Push Model of Inflation, Increases in Nominal-Wage Rates

question 22

Multiple Choice

In the cost-push model of inflation, increases in nominal-wage rates that exceed increases in the productivity of labor

• A)increase aggregate supply and the price level in the economy.
• B)increase aggregate supply and decrease the price level in the economy.
• C)decrease aggregate supply and the price level in the economy.
• D)decrease aggregate supply and increase the price level in the economy.

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Definitions:

Pension Benefit

A retirement plan that specifies the amount of payment an employee will receive upon retirement, based on factors like years of service and salary history.

Accrued Product Warranty Expense

An expense that represents the estimated cost of warranty claims on products sold that have not yet been claimed.

Insurance Co.

Abbreviation for Insurance Company, which is a business entity that provides coverage, in the form of compensation resulting from loss, damages, injury, treatment or hardship in exchange for premium payments.

Pension Plan

A pension scheme where an employer is obligated to contribute to a fund dedicated for an employee's benefit upon retirement.