If Workers Underestimate Inflation, the Aggregate Supply Curve Will Tend

question 203

Multiple Choice

If workers underestimate inflation, the aggregate supply curve will tend to be

• A)upward sloping.
• B)downward sloping.
• C)vertical.
• D)horizontal.

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Definitions:

Consumer Price Index

An indicator quantifying the mean variation over periods in the financial commitments urban consumers make towards a particular set of consumer goods and services.

Basket of Goods

A fixed set of consumer products and services whose price is monitored over time to calculate inflation through the Consumer Price Index.

Inflation Rate

The rate at which prices for a wide range of goods and services go up, causing a decline in how much can be bought with the same amount of money.

Teddy Bears

Soft, plush toys in the form of bears, often given as a comfort object for children and as gifts of affection for holidays or special occasions.