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

Recognize the impact of failing to record financial statement items.

Understand and calculate cash flows associated with interest, supplies, salaries, and revenue.

Calculate correct net income including adjustments for revenues, expenses, and depreciation.

Understand the difference between cash basis and accrual basis of accounting.

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