If Nominal Wage Rates Are Contractually Determined and Cannot Change

question 82

Multiple Choice

If nominal wage rates are contractually determined and cannot change in the short run, then an unexpected increase in the inflation rate will:

• A)increase business profits and reduce the unemployment rate.
• B)reduce both business profits and the unemployment rate.
• C)reduce business profits and increase the unemployment rate.
• D)increase both business profits and the unemployment rate.
• E)cause no change in business profits or the unemployment rate

---

Definitions:

Product Warranty Expense

Costs that a company incurs for repairing, replacing, or servicing products under warranty.

Sales

The total revenue generated from the sale of goods or services by a company during a specified period.

Warranty Obligations

Commitments made by a seller to repair, replace, or refund products that fail within a certain period.

Warranty Expense

Expenses a business faces for the repair or replacement of products covered by warranty.