As the Proportion of Labor Contracts That Index Wages to Prices

question 4

Multiple Choice

As the proportion of labor contracts that index wages to prices declines,we would expect that

• A)a reduction in the unemployment rate will now have a smaller effect on inflation.
• B)the natural rate of unemployment will increase.
• C)the natural rate of unemployment will decrease.
• D)nominal wages will become more sensitive to changes in unemployment.

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Definitions:

Simone Martini

An Italian painter from the early 14th century, known for his contributions to the Gothic style, particularly in the use of elegant and graceful figures.

Classical Art

An art form originating in ancient Greece and Rome, notable for its emphasis on harmony, proportion, and adherence to recognized standards of form and craftsmanship.

Avignon Papacy

The period from 1309 to 1376 during which seven successive popes resided in Avignon, France rather than in Rome, leading to a significant schism within the Catholic Church.

Florentine Academy

An institution founded in Florence, Italy, in 1563, aimed at studying and promoting the arts, particularly painting, sculpture, and architecture.