Suppose the Economy Consists of Two Distinct Groups: Wage Earners

question 26

Multiple Choice

Suppose the economy consists of two distinct groups: wage earners and goods sellers.If the price level increases by 30 percent and real wages increase by 30 percent,

• A) there will be no redistribution of purchasing power between goods sellers and wage earners
• B) purchasing power will be redistributed from wage earners to goods sellers
• C) purchasing power will be redistributed from goods sellers to wage earners
• D) nominal wages will increase by 90 percent
• E) nominal wages will decrease by 60 percent

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