An increase in Consumption would cause which of the following? Cost-Push inflation declining Real GDP deflation...
An increase in Consumption would cause which of the following?
|
Cost-Push inflation |
|
|
declining Real GDP |
|
|
deflation |
|
|
Demand-Pull inflation |
If the inflation rate is greater than the nominal interest rate, the following effects would be likely.
|
C decreases, I decreases, GDP decreases |
|
|
C decreases, I increases, GDP increases |
|
|
C increases, I increases, GDP increases |
|
|
C increases, I decreases, GDP decreases |
Your employer offers a 4% raise, anticipating a Fed target inflation rate of 2%. The actual inflation rate turns out to be 6%. What, therefore, would be the change in your Real Wage after your raise?
|
10% |
|
|
4% |
|
|
-2% |
|
|
-6% |
Homework Answers
a) An increase in the consumption would cause demand pull inflation in the market. the answer is "D".
b) "B"
This will decrease the consumption, increase the investment and GDP will increase.
c) -2% the real wages in the market will be the return the wages have actually decreased.
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