If Wages Grew at 5% Last Year and Average Prices

question 106

Multiple Choice

If wages grew at 5% last year and average prices grew at 3%, then the average worker:

• A) is better off.
• B) is worse off.
• C) has lost purchasing power.
• D) is unaffected.

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Definitions:

Short Run

A period in economics during which the quantities of some inputs, typically capital, cannot be changed, affecting how firms adjust production levels.

Long Run

A period of time in economics during which all inputs, including capital and labor, can be adjusted, and all markets are in equilibrium.

Shutdown Point

A situation in microeconomics where a firm's revenue is equal to its variable costs, indicating it would incur losses by continuing production.

Firm's Output

The overall amount of products or services generated by a company over a specific timeframe.