For Purchasing Power to Stay the Same, Wages Must

question 186

Multiple Choice

For purchasing power to stay the same, wages must

• A) decrease as the rate of inflation increases.
• B) increase more slowly than the rate of inflation.
• C) increase at the same rate as inflation.
• D) increase faster than the rate of inflation.

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Definitions:

U.S. Net Capital Outflow

The difference between the amount of U.S. assets bought by foreigners and the amount of foreign assets bought by Americans within a specific time period.

Chinese Currency

Refers to the official currency of China, primarily the Renminbi (RMB), with the yuan as the basic unit.

Trade Deficit

A situation where a country's imports of goods and services exceed its exports, leading to more money leaving the country than coming in from foreign nations.

Net Outflow

The difference between the outflow of funds for foreign investments by citizens and the inflow of foreign funds for domestic investments.