If Workers and Firms Expect That Inflation Will Be 5

question 125

Multiple Choice

If workers and firms expect that inflation will be 5 percent next year,and real wages are not changing over time,by how much will nominal wages increase?

• A)5 percent
• B)more than 5 percent
• C)less than 5 percent
• D)depends on actual inflation for next year

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Definitions:

Source Monitoring

The process by which individuals determine the origins of memories, knowledge, or beliefs.

Reality Monitoring

The process of distinguishing between memories of actual events and those of imagined events.

Source-monitoring Error

A type of memory error where a person incorrectly attributes the source of their information or memories.

Reality-monitoring Error

A cognitive malfunction where an individual has difficulty distinguishing between what is real and what has been imagined or thought.