In the Cost-Push Model of Inflation, Increases in Nominal-Wage Rates

question 219

Multiple Choice

In the cost-push model of inflation, increases in nominal-wage rates that exceed increases in the productivity of labor

• A) increase aggregate supply and the price level in the economy.
• B) increase aggregate supply and decrease the price level in the economy.
• C) decrease aggregate supply and the price level in the economy.
• D) decrease aggregate supply and increase the price level in the economy.

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Definitions:

Hoover

Refers to Herbert Hoover, the 31st president of the United States, who is often associated with the early years of the Great Depression.

Economic Prosperity

A state of flourishing financial health and growth, often characterized by a high standard of living and low unemployment rates.

International Commerce

The exchange of goods, services, and capital across international borders, influenced by economic, political, and legal factors, and facilitated by globalization.

Mass Consumption

The large-scale purchasing of goods and services by a significant portion of a population.