If the Percentage Increase in Nominal Wage Rates Is Less

question 13

Multiple Choice

If the percentage increase in nominal wage rates is less than the percentage increase in the price level, then:

• A)real wage rate rises and the unemployment rate falls.
• B)both real wage rate and the unemployment rate rises.
• C)both real wage rate and the unemployment rate falls.
• D)real wage rate rises and the unemployment rate remains unchanged.
• E)both real wage rate and the unemployment rate remains unchanged.

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Definitions:

Socially Optimal Price

This is the price point at which the social benefits of product consumption match the overall cost of production, aiming for an efficient allocation of resources.

Natural Monopoly

A type of monopoly that exists due to the high fixed or startup costs of operating a business in a specific industry, making it inefficient for more than one firm to operate.

Marginal Cost

The increase in cost resulting from the production of one additional unit of a product.

Demand Curve

A graphical illustration that demonstrates the link between the cost of an item and how much of it consumers are willing to buy.