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:

Distribution

The process of giving out something to multiple recipients, or the statistical arrangement of values within a dataset.

Mode

The value that occurs most frequently in a given set of data.

Distribution

In statistics, a mathematical representation of the observed or possible frequencies of occurrences of a range of outcomes.

Normally Distributed

A statistical term describing data that fall into a symmetrical, bell-shaped curve where most observations cluster around the mean.