In a Model with Sticky Nominal Wages an Increase in the Money

question 53

Multiple Choice

In a model with sticky nominal wages an increase in the money supply will:

• A)lower the real wage.
• B)increase real output.
• C)increase the labour input.
• D)all of the above.

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Definitions:

Annual Rate of Return

The ratio of gain or loss on an investment across a span of one year, expressed as a percentage.

Incremental Analysis

An examination of the additional benefits and costs of certain business decisions, focusing on the changes from the current state.

Opportunity Cost

The cost of foregoing the next best alternative when making a decision, representing the benefits one could have received by choosing a different option.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time.