If Workers Expect Inflation, and Tend to Overestimate Actual Inflation

question 154

Multiple Choice

If workers expect inflation, and tend to overestimate actual inflation when they negotiate wage increases, the result will be a continuing

• A)shift of AD to the left.
• B)shift of AD to the right.
• C)recessionary gap.
• D)inflationary gap.

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Definitions:

Security Interest

A legal claim or lien on collateral that has been pledged, usually to secure repayment of a loan.

Collateral

Assets pledged by a borrower to secure a loan or credit, which can be seized by the lender if the borrower fails to repay according to the agreed terms.

Enforceable Security Interest

A legal claim or lien on collateral that secures the fulfillment of a debt or obligation, which can be enforced in court.

Escrow

A financial arrangement where a third-party holds and regulates payment of the funds required for two parties involved in a given transaction, ensuring fair and secure dealing.