Suppose in Country X, Anticipating High Inflation in the Economy

question 25

Multiple Choice

Suppose in Country X, anticipating high inflation in the economy, wages of workers are increased in the beginning of a financial year. However, prices remain unchanged during the year. Everything else remaining constant, which of the following will be observed in this economy?

• A) The cost of labor, that is the real wage will decline
• B) The current profits of the firm will rise
• C) Aggregate supply in the economy will increase
• D) Annual production in the economy will remain unaffected
• E) The aggregate supply curve will move to the left

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Definitions:

Randomized Block

A design in experiments where the experimental subjects are first divided into blocks based on external factors that might influence the results, and then randomly assign treatments within each block to minimize variability.

Analysis of Variance

A statistical method used to test differences between two or more means by analyzing variance among and between groups.

Sign Test

The Sign Test is a nonparametric test used to determine if there are significant differences between the medians of two paired samples.

Population Locations

Geographical areas or positions where members of a specific population are found or inhabit.