If Workers and Firms Forecast Inflation Accurately

question 4

Multiple Choice

If workers and firms forecast inflation accurately,

• A)the aggregate supply curve will be vertical.
• B)the real wage will not decline as the price level rises.
• C)workers will not lose from inflation, and firms will not gain.
• D)All of these responses are correct.

---

Definitions:

Short-term Investments

Assets that are expected to be converted into cash, sold, or consumed within one year or within the operating cycle of the business, whichever is longer.

Financing Section

A segment of a business's cash flow statement that shows the net flows of cash used in funding the company, including debt, equity, and dividend payments.

Investing Activities

Transactions involving the purchase or sale of long-term assets and investments, which affect the company's capital structure.

Cash Dividends

Payments made by a corporation to its shareholders, usually as a distribution of profits.