In the Short Run, If the Actual Rate of Inflation

question 242

Multiple Choice

In the short run, if the actual rate of inflation falls lower than the expected rate, then

• A) profits will temporarily fall and unemployment will temporarily rise.
• B) profits will temporarily rise and unemployment will temporarily fall.
• C) nominal wages will rise, profits will rise, and unemployment will fall.
• D) nominal wages will fall, profits will fall, and unemployment will rise.

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Definitions:

Current Stock Price

The price at which a stock is trading on the public market at any given time.

Market Rate of Return

The average annual return generated from a market or a specific investment over a specific period, often considered a benchmark.

Annual Dividend

The total payment a company makes to its shareholders out of its profits over the course of a year.

Dividend Growing

A situation where a company consistently increases the amount of dividends paid to shareholders over time.