If Workers Always See Inflation Coming, and If They Demand

question 146

Multiple Choice

If workers always see inflation coming, and if they demand wage increases in advance so that inflation does not erode real wages, then the economy's aggregate supply curve on the AD-AS diagram will

• A)be a vertical line corresponding to potential GDP.
• B)be a horizontal line corresponding to potential GDP.
• C)slope downward.
• D)slope upward.

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Definitions:

Acetylcholine

A neurotransmitter in the brain that plays an important role in muscle contraction, arousal, and memory.

Pons

A structure of the hindbrain involved in respiration, attention, and sleep and arousal.

Craving

A powerful and intense desire or longing for something, often related to addiction or emotional needs.

Cocaine Addict

Refers to an individual who is dependent on the psychoactive drug cocaine, characterized by the compulsion to use the substance despite harmful consequences.